7735.T - SCREEN Holdings Co., Ltd.

Akihiko Miyagawa: Good afternoon, everybody. Let us start the SCREEN Holdings Company's full year financial results explanation for the year ending in March 2025. Let me introduce you today's presenters.So first of all, Toshio Hiroe, Representative Director, President and CEO. This is Hiroe. Thank you very much for your participation. And this is Yoichi Kondo, Representative Director and CFO. This is Kondo. And in addition to CEO and CFO, we have three officers. First, Masato Goto, Senior Managing Executive Officer, Ms. Goto; and Manabu Ishimura, Senior Financial Strategy Officer. This is Ishimura. And Akihiko Miyagawa, Senior Corporate Strategy Officer. I am Miyagawa. Thank you very much. Now we'd like to have Kondo, CFO, to give the presentation about the financial results. Yoichi Kondo : Now let me start my presentation on the briefing of the financial results for the year ending March 2025. First of all, we achieved the increase of the sales and profit against the previous year, hitting the record highs for the fourth year in a row, especially SPE made a great contribution in leading this growth. And the year-end dividend payment will be raised to JPY 188 per share compared to the January forecast of JPY 163 per share. And annual dividend payment will be JPY 308 per share, also record high. And about SPE, there is a client request for the early delivery, so we could see the large increase in the sales and profits year-on-year. Net sales, OP income and OP margin all hit the record highs. And net sales growth rate outperformed the WFE market for two years in a row. And we saw a great improvement in our market share for the single-wafer clinic equipment. And with FT, we saw the great improvement in the performance and balance sheet equity ratio improved to 62.7% and credit rating was raised to A+ by JCR. And let me move to the next page, and these are the figures. So the net sales JPY 625.2 billion, and operating income was JPY 135.6 billion with OP margin of 21.7%. And ordinary income was JPY 138.2 billion, and net income was JPY 99.4 billion. And against the same time of the previous year, the net sales increased by JPY 120.3 billion, OP income, JPY 41.5 billion, ordinary income increased by JPY 43.9 billion. Net income increased by JPY 28.8 billion over the previous year. And these are the graph is for your reference. So on the right side, you can find our ROE now hit 25.1%. And this is the composition of group sales by the region. So the Japan, 14%; Taiwan, 18%; China, 42%; South Korea, 5%; and other countries, 4% and North America 10%. So there's an increase in Taiwan and China with decrease in North America. And this is the sales by segment. So PE 2.3%, FT 5.7% and GA 8.5% and SPE 83.1%. And this is the consolidated earnings by segment. First of all, in the fourth quarter, the sales for SPE was JPY 135.5 billion and operating income was JPY 36 billion, OP margin, 26.6%; GA net sales, JPY 13.9 billion; OP income, JPY 1 billion; OP margin 7.2%; FT net sales, JPY 11 billion; OP income, JPY 1.6 billion, OP margin 15.4%; and PE net sales, JPY 4.5 billion, OP income, JPY 0.5 billion; OP margin 11%. And for the full year, SPE net sales was JPY519.5 billion, OP income, JPY136.9 billion, OP margin 26.4%, and GA net sales, JPY53 billion, OP income, JPY4.2 billion, OP margin 8.1% and FT net sales was JPY35.8 billion of sales, OP income, JPY3 billion, OP margin 8.5%; NPE net sales, JPY14.1 billion, OP income, JPY1 billion; OP margin 7.5%. And this is the comparison Q-on-Q and year-on-year. So SPE Q-on-Q, with the decrease of sales and profit, there was a difference of JPY19.3 billion or JPY5.8 billion because of the strong performance in the third quarter. So this is not a bad figure for the fourth quarter. There's increase in the sales to Taiwan and Japan. GA had an increase of sales by JPY200 million and profit decreased. And mainly in the United States, the caring business was strong, but the fixed cost increase had an impact on the profit. FT increased in sales and profit; sales increased by JPY700 million and profit increased by JPY400 million. Both the OLED SCD performed well and the variable cost reduced. And PE increased in sales and profit; sales increased by JPY1.9 billion and profit increased by JPY600 million. So both sales and profits increased; sales recovered both outside Japan, mainly for the direct patterning. And on year-on-year on the right side, SPE achieved an increase of sales and profit, so JPY101.8 billion, increase in sales and JPY39.9 billion, increase in profit. Sales to the leading-edge applications in Taiwan and mature nodes in China led the growth, and sales to foundry, logic, and memory all increased. NGA increased in sales, but profit was flat. So while the recurring business performed well, fixed cost increased. And next, FT increased in sales and profit; JPY12.5 billion increase in sales and JPY3.4 billion increase in profit. So there's a great improvement in the performance of FT. NPE decreased in sales and profit, with a minus JPY400 million decrease in sales and minus JPY700 million in profit. And this is a situation of the balance sheet, and JPY61.2 billion is a total and net asset increased to JPY420.6 billion, while the equity ratio improved to 62.7%. And because of this, the credit rating was improved to A+ by JCR, Japan Credit Rating Agency. The outlook is stable. And this is about the cash flow. In the fourth quarter, the operating cash flow was JPY26.8 billion; investment cash flow was minus JPY4.4 billion; free cash flow was JPY22.4 billion and financing cash flow was minus JPY19.7 billion. And as see year-on-year, the operating cash flow was JPY71.2 billion and investment cash flow was minus JPY21.7 billion and free cash flow was JPY49.4 billion, and the financing cash flow was minus JPY46 billion. So we have a very smooth progress with the cash flow. And this is the analysis of operating income growth. So the result of the year ending March 2024 was JPY94.1 billion, and there is an increase of the sales and capacity utilization, plus JPY50.5 billion, and profitability improvement was JPY4.5 billion, but there was a reduction by the fixed cost by JPY14.5 billion, and impact of the exchange rate was JPY1 billion. The result was JPY135.6 billion for the year ending March, 2025. And then the increase in sales and capacity utilization is attributable to SPE and FT and profitability improved mainly in SPE. An increase in the fixed cost is mainly due to the growth investment in SPE, labor cost, depreciation, amortization of expenses, et cetera, and exchange rate positively impacted GA and PE. Unidentified Company Representative: Thank you, Mr. Kondo. So Mr. Hiroe is going to explain the business environment and the outlook. Mr. Hiroe, please. Toshio Hiroe: So, I'm going to talk about the business environment and the outlook. First of all, about the business environment, the growth of the semiconductor device market is driven by the deep learning inference accelerators for servers, which is quite steady. And as for the manufacturing equipment, the leading-edge investment is continuing and also the mature node investment in China is also steady. So investment is continuing. Talking about GA, centering the Europe and the US, the business environment centered around the POD remains sound. Recurring business is also showing the steady progress. And talking about FT, the investment in OLED, as well as LCDs remain steady. We would like to aim for increasing both sales and profit. About the PE, while advanced packaging remains strong. But the market environment for printed circuit boards remains challenging. There is a delay in the investment decision by customers and full recovery is expected from the second half and onward. As for the business outlook, the FY 2026 full year forecast, we aim to maintain high levels of sales and profits, but there is an impact of U.S. tariffs. So we have conservative numbers factoring in the impact. And the second year of the mid-term management plan this fiscal year, we consider them as a phase of preparation for the further growth. And we are going to steadily implement growth investment as we have explained. And we aim to achieve our goals over the cumulative three-year period. This fiscal year, which has started, the annual dividend is projected to be JPY280 per share. And SPE business overview is going to be explained. Talking about WFE, in calendar year 2024 landed upward. And then we didn't expect that, but it was actually landed at $110 billion. So there was a rush demand. So calendar year 2025, we assume the same level, and calendar year 2026, the further growth is expected at this point in time. And the investment trends by application as for foundry, the cutting-edge applications are leading the WFE growth. The investment forecast in Asia, but is expected to expand into the North America. As for logic, the clients are carefully revising their investment plans. As for memory, the HBM for AI, the investment momentum is continuing. NAND is expected to see the same level as previous year. And the image devices, the investment is expected to resume later in CY 2025. Power device remains sluggish and the recovery is expected to be delayed to the calendar year 2026 onward. And then we added advanced packaging this fiscal year and the development has started at the panel level in addition to the wafer level. And talking about the China market, the investment continues steadily to build its own supply chain of semiconductor. And the last point, competitive environment market share has significantly improved briefly mentioned, the details will be given later. We face the or accommodate the customers' needs sincerely, and we would like to market our solutions in non-FEOL areas as well, including advanced packaging. And this is the consolidated trend by application. By application, the Q-on-Q, the foundry -- the sales to foundry is increasing further. In year-on-year, the foundry -- the sales to foundry and logic increased in ratio. And as for post-sales, the sales increased steadily. in January, the -- ¥126.2 billion and they actually ended ¥135.5 billion, therefore, a little upward. And then some of the customers wanted to have advanced delivery. So that was posted as March sales. Next is by destination. That's the same thing, but in January, the ratio for China was expected to be the 33%, but landed at 38%. As I explained earlier, the China project is increasing. This is the result. And by destination for Q4, Q-on-Q, the sales to Taiwan and Japan has increased significantly in ratio. The ratio of sales to China hasn't decreased. And the full year and year-on-year sales to Taiwan has grown significantly in ratio and the sales to China grew further from the previous year. And the full year at the far right, January, the forecast was the 510, but actually landed at 519.5 that the impact overall. And this one, the first half estimate of JPY 240.5 billion by application, the first half results and then the first half estimate compared, the foundry ratio decreased, but the DRAM portion is expected to increase. And if you compare the second half results and the first half forecast, the same things can be said. As for the foundry, the advanced investment is quite robust and also the investment in foundry in China is also emerging. As for the DRAM, the HBM leading-edge related and the China-related investment gave a positive impact -- is giving a positive impact when we look at this fiscal year. And next, about by destination, the first half results and the first half forecast are compared, it is expected to increase in the Taiwan and Korea. And the second half results and the first half estimate compared the big increase in the sales to Taiwan. The sales to China is expected to land in 44%. So the first half and the second half, which ended almost the same percentage in China. And the second half is we expect this percentage will decline a little bit. GA, centering the ink, the recurring business sales remains stable. We aim to improve the operating margin through the launch of new products. The new products release was delayed a little bit, but in June, we expect the launch in June, and we are working on the development, and we expect the contribution by this launch. And as for GA, the tariff in the US, 10% tariff is enforced. And so the recurring business, especially in ink same tariff will be imposed. And so that impact is factored in the current forecast. As for the FT, the display -- the sales have recovered due to the recovery of the display market. And going forward, the OLED is expected to take a center stage, but there is still solid demand for LCDs in China for TV, the subsidy is given their Chinese policy. So because of that, the demand is arosed. And therefore, the investment for increased production, we can see this impact. So in the previous year, we achieved the surplus for the first time in three years, and will further increase our profit in this year Next is about PE. So as was mentioned by Mr. Kondo, the PE is a little bit struggling. In general, investment into packaging little bit weak right now. So at the end of the calendar year 2025, we can expect the increase of recovery of the investment. And order intake of the post sales has been at the high ratio. So I would like to place expectation on it and wait for the recovery. And next page is about the business forecast. So about the first half, the sales is JPY 299.5 billion and operating income JPY 54.5 billion, the OP margin 18.2%. These are the targets. And for the second half, net sales ¥321.5 billion and operating OP income ¥60.5 billion, OP margin 19.4% are our targets. So for the full year, our net sales target is ¥621 billion, OP income ¥117 billion and OP margin 18.8% are the full year targets. And ¥88 billion is the net income expected, which means the decrease in the profit, but we'd like to find a way to improve it further. And about SPE, in the first half, the target is ¥240.5 billion, OP income ¥57.5 billion. OP margin 23.9% is expected. And for the second half net sales ¥261.5 billion is expected, OP income ¥63.5 billion with OP margin of 24.3%. And for the full year, ¥502 billion of sales expected with ¥121 billion of OP income and 24.1% of OP margin up planned. And GA so the other businesses, let me introduce you the one for the full year with net sales of ¥53 billion, OP income ¥2.5 billion and the 4.7% OP margin. And FT net sales ¥45.5 billion, as OP income ¥5 billion, 11% OP margin. And PE ¥15 billion of net sales with OP income of ¥1 billion with 6.7% OP margin and others expected net sales of ¥5.5 billion and OP income with a loss of ¥12.5 billion because of the advanced investment into the research and development. And I think SPE is a business you are paying attention to. So let me elaborate on SPE. So in SPE, we have to make the greater investment into the research and development. So including the labor cost, the fixed cost of SPE will be larger from now. And product mix compared to the previous year, the product mix is a little bit weaker, especially with the China. The ratio on the new customers will decrease. That is a feature we now expect, that is result in the exacerbation of the product mix. And about GA, we expect the impact of tariff and FT may also have the impact from tariff. So we expect a slight impact from the current tariff. And next is about the R&D expenses, CapEx and depreciation. So in the previous year, we can find the trend, which was explained by Kondo a moment ago. So the CapEx exceeded generally forecast. But as for the R&D expense, we were short of the budget. And this will be shifted into the project in this fiscal year. So in this fiscal year, we have ¥38 billion of the other expenses and ¥28 billion of capital expenditure and ¥15 billion of depreciation and amortization. So we'll execute our investment as planned so that we can achieve the next phase of growth. And this page is for your reference. Next page, please. And this is the waterfall chart, which shows the analysis of operating income growth. So ¥135.6 billion in the results of year ending in March 2025. We have the increase of ¥8 billion in sales and capacity utilization, which is mainly led by FTGA and PE. And the profitability is minus ¥2 billion. And FT, GA and PE have the positive performance, but because of the product mix I mentioned earlier, the SPE is on the negative side. And the fixed cost coming from the research and other expenses, labor costs, and investment into the future growth, and also the increase of depreciation, so we expect minus ¥19.5 billion, and mostly coming from the SPE business. And impact of the exchange rate is minus ¥5.5 billion. And SPE and GA share this impact from exchange rate. So the total is ¥117 billion. And exchange rate is ¥135 for dollar and ¥150 for euro. And the sensitivity hasn't changed from the previous year. And next page about the annual dividend output. As was mentioned by Mr. Kondo a moment ago, for the year ending in March 2025, at the end of the year, we're going to make ¥188 of the year-end dividend payment, which will make the annual dividend to ¥380 record high per share. And the focus for the year ending March 2026, interim dividend payment will be ¥123 and year-end dividend will be ¥157. So annual dividend will be ¥280. And we are going to achieve the payout ratio of 30% or above as a target. And these figures support this target. And total payout ratio is expression we have used so far. And as you know, since the previous fiscal year, we made the ¥30 billion share buyback, which was complete in April. And ¥18.9 billion of the share buyback was complete in the previous year. The total shareholder return ratio is 48.9%. And next page, this is already announced. On June 20th, we have the 84th Annual General Meeting of shareholders and this has to be approved on that occasion but we'll have the change of representative directors in this way. And I myself will have the new title of Representative Director, Member of the Board, Chairman. And today, we have Koto [ph] in this meeting, and he will be the Representative Director, Member of the Board, President and Chief Executive Officer, who is now the Senior Managing Executive Officer. And Mr. Kondo will serve as a Member of the Board, Executive Vice President and Chief Financial Officer. So myself and Mr. Kondo will support Koto-san, Mr. Kondo. And -- we have been receiving the support from Mr. Takeuchi, the Chairman, and Mr. Takeuchi will remain as executive adviser for us. So he will be active in the field of economic cycle. And through the value of 2030, the midterm management plan period, by introducing the ROIC system, we could see the improvement in the business management so that we now have the power of capability to generate cash. And the current period of midterm management plan, the priority is to where we make the investment from now. So we will continue to make the strategic investment, so that we can be prepared for the next level of growth. And at this timing, we will succeed the business to the new generation of management. And I think this is a very appropriate step for us. That's why we decided in this way. And in the coming midterm management plan, so which follows 2026, we are now the timing to come up with the next midterm management plan, and we'll ask Mr. Goto to take initiative in coming up with the next midterm management plan. So Mr. Goto, do you have any comment at this moment? Masato Goto: And I am Goto. So together with Mr. Hiroe and Mr. Kondo, we will be involved in the management of the business of SCREEN Group, and I ask for your kind and continuous support. So thank you very much. Yoichi Kondo: Okay. Now, I would like to talk about the progress of Value for 2026. I already explained about the financial results. So today, I would like to focus on ROIC and then the first year result was 24.7% of ROIC. And the second year forecast is 19.6%. However, we would like to increase further. The topic is attached. Among the topics, what I would like to introduce is the acquisition of Land in Yasu. I hope you will be aware of that. And then the semiconductor manufacturing equipment production site will be produced overseas, and we have decided the direction of that investment. And by doing such investment steadily for the next investment, we would like to work for the further growth. And the appendix is attached to the major equipment global share, you can find the appendix and the Gartner that released the number, the single wafer cleaning equipment, we have a 42% market share and batch type cleaning equipment, 46% and spin scrubber, 45% of our market share has increased mainly due to the leading-edge foundry or the mature node foundry, the POR was acquired. And the ASP has been gradually increased because of pass on our prices. And as for the new topic, advanced package area cleaning application has been widened, and that is contributing to the certain amount of sales. And due to these factors, our market share is growing. And so continuously, we would like to increase our market share. So that's all for me. And I myself, this is my last presentation in the briefing of our financial results. Thank you very much for your kind cooperation. And Mr. Goto will succeed me, and thank you for your continued support and cooperation. Thank you very much, Mr. Hiroe. A - Unidentified Company Representative: So, moving to the Q&A. Morgan Stanley, MUFG, Wadaki-san, please. Tetsuya Wadagi: Thank you. As for the forecast and plan, in comparison to that, they look a bit smaller. But as for the second half, how much can you foresee, I mean, forecast? You had an interview; you have full capacity in the plant. And as for the second half, how much can you forecast, including the capacity utilization of your capacity at the plant? Hiroe, is going to answer your questions. Toshio Hiroe: That's for the forecast for the second half. As for the first half, we have insight. And as for the second half -- the third quarter -- half of the third quarter has inside our in our impression. From the year-end to the following year, the project is still uncertain. So, due to the tax impact taken into consideration, we have announced the forecast in a conservative way. First quarter, at the end of the first quarter, we can see the second half clearly. At the end of the first quarter, we would like to share the information with you. Tetsuya Wadagi: Okay. Understood. And the second question, generally speaking, the transaction with the companies on the entity list -- how do you consider that? Are you not going to have a transaction with them or, along with the regulations, are you going to continue yourselves? Toshio Hiroe: We follow the guidelines of the Ministry of Economy, Trade and Industry, and we operate our business. And the entity risk-related companies -- the U.S.-made needs to be used 25% or higher. So, it's not covering our business. So, we follow the regulations of the Japanese government. Tetsuya Wadagi: Okay. Understood. Thank you very much. Unidentified Company Representative: Thank you very much, Wadagi. Now Mr. Shimamoto from Okasan Securities. Takashi Shimamoto: Hi. This is Shimamoto from Okasan Securities. Can you hear me? Toshio Hiroe: Yes. Takashi Shimamoto: Thank you for this opportunity. I have a question about how to read the WFE business. So, in a quantitative way, in a more specific way, would you elaborate on the foundry and Chinese market situation? How do you see the coming year about these businesses? Toshio Hiroe: About WFE, we had a kind of last-minute demand increase at the end of the year. So, for this year, we have the focus a little bit smaller. So we expect the level will be the same as that of the previous year for this fiscal year, which is mainly led by the foundry. So investment into the leading edge has been continuing and also, in the Asian region, including China, the investment will be made. That's how we see the situation. And unfortunately, logic seems to be a little bit weaker. In Memory, the investment leading to HBM is now very sound, especially DRAM HBM-related investment is now very active. And NAND is same level as that of the previous year. And for the image device, from the end of the fiscal year, we expect the recovery in investment then we can expect a certain level of sales and profit. And the power device is a little bit weak. Takashi Shimamoto: Thank you for your answer. Another question is about China. So do you see the situation in China positive or negative? Toshio Hiroe: In the first half in China, we came up with a forecast, so to be at the 44% comparable to that of the previous year. And toward the second half, this will decline to about 30%. That's how is the situation now. Takashi Shimamoto: Thank you very much. So the total of China will be negative from now? Toshio Hiroe: Yes. Takashi Shimamoto: Thank you for your answer. I have another question. So, impact of tariff. So you mentioned that you already incorporated the impact of tariff. And if you can elaborate on how much impact you actually involved? And I think GA has a direct impact. But as for the production equipment, how did you incorporate the impact of tariff in your forecast? Could you explain on this point? Toshio Hiroe: So the impact of tariff on GA, now we have the baseline 10% tariff. That's what I mentioned earlier. And with this figure, the tariff impact is incorporated. So, billions of yen of impact is expected. And for SPE, not much impact is incorporated. At present, how the tariff will be imposed on semiconductor is now being studied as a separate box. That is the current situation we acknowledge. So there's a tariff on aluminum spare parts. And how -- so it is relevant to the -- we have to calculate the amount of weight of aluminum contained in the component and parts to come up with the exact impact of the tariff. So we are now working on that very difficult analysis. And I think we can find more details in April or May. And when the things became more clearer, we'd like to share that information with you. Takashi Shimamoto: Thank you very much. That’s all for me. Operator: Thank you, Mr. Shimamoto. Next, Goldman Sachs, Mr. Nakamura, please. Shuhei Nakamura: Thank you very much. Thank you very much, Mr. Hiroe for your great support. The first point, the impact of the tariff, the new fiscal year the forecast factoring in situation was explained. But at the moment, from your customers' forecast or the investment plan from your customers, after the tariff topic came up, is there any change or concerning the inquiries or the order received? Toshio Hiroe: At the moment, GA, SPE, no impact has been seen. After this time, we -- based on the assumed impact, we may ask the customers, then some kind of impact may be given. But for the time being, no outstanding impact is seen. So at the moment, advanced order demand is not occurring. Yes. As I explained, the Chinese customers, a little bit requested to make an advanced delivery in the year, which it was ended. But other than that, it's steady. And the second question, considering the profit of the SPE in the new year, the OP margin is going to decline and the product mix and the R&D and the labor cost increase were explained. In comparison to the previous year, the 2.3% point seems to decline this fiscal year, but the gross margin and the SG&A and what would be the breakdown? And SG&A seems to be increasing in your plan. Would you explain or elaborate on that? Yoichi Kondo: Exactly, you mentioned the impact is product mix. Product mix impact is bigger. The R&D cost increase is factored in to some extent. So, there is some impact of R&D. Ishimura-san, do you have any additional comments? Manabu Ishimura: Miyagawa is going to add as for the fixed cost, looking ahead, the labor cost increase by increasing the personnel and then R&D expenses going to be increased, and they are reflected. Shuhei Nakamura: Okay. Understood. So the cost of sales also increased about 1% point and so those SG&A also increased by 1 percentage point. Yoichi Kondo: Yes, that's right. Thank you. Operator: Thank you very much. Next, Mr. Yoshida from CLSA Securities, please. Yu Yoshida: Thank you very much. This is Yoshida. And Mr. Hiroe, thank you very much for your great work so far, and I expect your continuous great work. And my question is about WFE. A moment ago, you made a comment by application, especially about foundry, you said that situation is sound. You expect -- do you expect a positive growth from now? So, when the foundry DRAM achieved growth, logic may be a negative growth, but power device negative. But in general, I think rather than flat, the performance of the SPE will be stronger. So, when you see the total situation, how do you see the 2025? And -- in your comment, you expect a further growth into the FY 2026. But toward 2026, do you expect any change in any application? Toshio Hiroe: So the foundry, we expect to be a positive growth, but the mature node in China in the second half may decrease. That's how we expect. And this part will have the negative impact offsetting the situation. So that's why we expect the growth will be flat from 2024. And in 2026, we expect a further growth because we have the investment into the overseas halves. And we can expect the contribution from these overseas halves into which we are now making investment right now. Yu Yoshida: So with foundry, Asian manufacturers overseas deployment will make the contribution into the 2026. That's how you expect the growth. Toshio Hiroe: Yes, including America United States, we can expect the situation move in that way. Yu Yoshida: And my second question, so in this -- you said that you have certain level of visibility for the first half. And -- but compared to the fourth quarter of the previous year with SPE, what kind of direction you now find? And compared to three months ago, how do you evaluate the current level of demand or order intake? Do you see any change in the trend? Toshio Hiroe: So environment for the order intake compared to the fourth quarter in the previous year, where the order level was a little bit slower, smaller. And on the timing of the fourth quarter, the customers did not place the orders with us because of their own reasons. And we have a report that in the first quarter, we are not receiving orders from these customers. So we are not concerned about the situation. So how the order intake will increase in the first quarter will be the kind of indicator for us to make the forecast for the order intake for the full year. And the visibility we have about the first quarter or first half, especially about the first quarter, we have the good visibility. But customers sometimes changes the expected delivery date or delivery timing. And that kind of fluctuation should be expected for the quarter. But level of the order intake is enough for us for the quarter. And I think this situation will continue until the end of the first quarter with enough amount of order backlog. So compared to the fourth quarter, do you expect the sales trend is same from the first quarter. So how do you see the trend? So as you see on the screen right now, compared to the first quarter of the previous year, there's a slight increase in the coming first half. So in the first half to first half comparison, there will be a rise. But as we have been saying, in the second half, because of the several factors, there's a possibility that in the second half, there will be greater sales in the second half. So whether we can achieve the same level of JPY 2,904 billion in the second half of this year is now being scrutinized or studied as now. Yu Yoshida: Thank you very much. Operator: Mr. Nakanomyo from Jefferies, please. Masahiro Nakanomyo: Nakanomyo of Jefferies Securities. Thank you very much. And thank you very much for your work so far. And I'm sorry to repeat, but as for China, the entire market based on the WFE -- in the previous quarter, the CY 2025, the China is not expected to decline so much. I believe you talked about that. But in 2024, there was an upside, but how do you see the decrease in 2025? In your explanation, so far, the immersion is weak, but existing is quite steady. But among the immersing, there are some strong companies. Is there any changes for the past three months? Toshio Hiroe: No change has been seen. At the end of the day, according to the WFE, at the end of 2024, there was a portion of increase. That portion will become negative in 2025 according to my impression. The previously, the first half China portion is high, but less in second half. And -- but at the end of it would be the middle 30% level. This is what I explained. And then it has been progressing as we had expected. So the percentage you mentioned is your company and percentage of your company and the percentage of WFE. Now we are talking about our company's percentage. And so according to the WFE, I don't know, Goto-san, do you have any comment? Masato Goto: Then according to WFE, as Mr. Hiroe mentioned earlier, there is no significant change. So our prospect or the forecast is almost the same as the forecast of WFE. Q – Masahiro Nakanomyo: So the investment of existing players increasing or do you see any trend? Masato Goto: The existing customers is getting stronger. Yes, that's the trend this fiscal year. I'm talking about this fiscal year. Q – Masahiro Nakanomyo: Okay. Thank you very much Masato Goto: Thank you. Operator: Thank you very much Mr. Nakanomyo. Next is Mr. Yoshioka from Nomura Securities. Q – Atsushi Yoshioka: I have two questions. So first one is about the market of WFE. So I want to confirm in that sense. So is there any possibility of the downward revision about WFE or you haven't made any downward revision? And compared to three months ago, is there any change taking place by application? So if there are any application with great change, please advise them. Toshio Hiroe: So compared to three months ago, as has been commented by Goto-san a moment ago, in all market, we haven't changed our view. So simply put, the one slided into the -- this fiscal year is now analyzed how they will have an impact on the performance. So what is strongly performing is the generative AI-related leading edge or HBM. We have the impression they are performing very strongly. And as I touched upon, the cleaning in the advanced packaging area is growing, and this is an area we place expectation on. Q – Atsushi Yoshioka: Thank you very much. And a follow-up question about the advanced packaging. So are there any factors behind the sharp? And your ratio in your sales, what scale of business? So how much growth do you see with advanced packaging? And compared to the others, you have the high share. Can we see in that way? Masato Goto: Thank you for your question. Advanced package cleaning is now applied by the customers who are working on the development of leading-edge applications. So we have the inquiries from them and develop various products. So this is the background of the growth. And volume-wise, it is not so big to talk about. It's billions of yen of scale. Q – Atsushi Yoshioka: Thank you very much. And my second question, please briefly comment on the forecast between the first and the second half. And your visibility about the second half is not so clear at this moment. But when you make the comparison between the first and second half, this is about SPE. So I think you expect the growth of the sales. So would you elaborate by application? So which sales -- which application sales do you expect to increase into the second half? Masato Goto: So the foundry will lead the growth. There was no change in that. And memory-related business will get stronger in the second half. So DRAM may be strong. Hiroe-san, do you have any comment on Flash? Toshio Hiroe: So Flash may increase in the second half. Q – Atsushi Yoshioka: Thank you very much. I understand. Operator: Thank you, Mr. Yoshioka. Since there is no person to ask questions. And so with this, we would like to conclude the 2025, the consolidated business results and forecast briefing. Thank you very much for joining today.

Unknown Executive: Hello, everyone. Now it's time, so we would like to start SCREEN Holdings' 2025 March third quarter's financial results reporting. Session will begin now. Now, I would like to introduce our presenters. Representative Director, President and CEO, Toshio Hiroe. ?????: This is Hiroe. Thank you for having me today. Unknown Executive: And Representative Director, CFO, Yoichi Kondo. ?????: I'm Kondo. Thank you. Unknown Executive: And on top of CEO and CFO, we have relevant 2 directors. Senior Corporate Strategy Officer, Masato Goto. Masato Goto: I'm Goto. Thank you. Unknown Executive: Senior Financial Strategy Officer, Akihiko Miyagawa. Akihiko MIyagawa: I'm Miyagawa. Thank you. Unknown Executive: At the beginning, our President, Hiroe, is going to talk about our delayed submission of the Interim Securities Report. We sincerely apologize for the concern and confusion this has caused to our stakeholders, including our shareholders and investors. I would like to give you some report about facts. First of all, the results and [indiscernible] the indefinite conclusions from the auditing firm was attached to the interim financial report that we have submitted to the Kanto Local Finance Bureau, it was accepted. And on the 13th of February 2025 and [ March ] third quarter the interim financial result/report was also submitted with the review report from auditing firm. And as to the Special Investigation Committee report on the 10th of January, the report was accepted by a Board meeting or the Board. And actually, there was some improper treatment of numbers partially after reviewing the report. However, the scope is limited and also significant in terms of the finance amount was limited. Therefore, we decided not to revise the past year's account settlement since publication of this report is scheduled on the 14th of January. Now about the measures to prevent recurrence. On the 10th of January this year, we launched the project team to formulate measures to prevent recurrence. So basically, in the Special Investigation Committee's report, we now realize that there has been some gap between the field operation and the profit recognition standards and also the compliance awareness must have been suboptimal. So in order to address these problems, we are now looking into the possible countermeasures. So in the end of February, we are planning to publish the countermeasures against the recurrences. So when we do so, we are also planning to announce the plan of the penalty. Now we would like to move on to the consolidated financial results report. And the presenter Mr. Kondo. ?????: Now, let me review the report the financial results. The quarter's consolidated results year-on-year, we were able to achieve both increase of the revenue and the operating profit, the ordinary profit, net profit across the board, we were able to accomplish the record high. SPE drove this positive results. So SPE, GA and FT, they are trending very solid. As to SPE, the revenue and profit increased year-on-year and marked the record high revenue on operating profit and OP margin. Equity ratio was 61.4%. Now the numbers. This is the third quarter cumulative numbers. The revenue was JPY 459.9 billion, operating profit JPY 100.6 billion and OP margin, 21.9%, ordinary income of JPY 102.3 billion and net profit JPY 69.5 billion. The year-on-year difference is JPY 112.1 billion increase in terms of the revenue. The operating profit up by to JPY 36.9 billion. Ordinary income up by JPY 37.6 billion. Net profit up by JPY 24.9 billion. Sales by destination, 12% Japan; 14%, Taiwan; 47%; China; Korea, 7%; 6% Other-Asia; North America, 9%; and Europe, 5%. Now the sales spread or breakdown by segment. SPE 84.8%, GA 7.6% and FT 5.6%, PE 1.5%. Third quarter single company numbers. The SPE, revenue, JPY 154.8 billion, the operating profit JPY 41.9 billion. OP margin, 27.1%. GA, JPY 13.7 billion. OP JPY 1.2 billion, OP margin, 9.2%. FT, JPY 10.2 billion revenue and JPY 1.2 billion, OP12.4% -- OP margin. And PE, JPY 2.6 billion revenue, minus JPY 100 million of OP and the OP margin minus 4.3%. Now this is the Q-on-Q. First, SPE increase of revenue by JPY 38 billion and OP increased by JPY 11.9 billion, and this was due to the increase in China and Korea. As for GA, increase in sales by JPY 900 million. Profit is flat. Recurring business is trending positively, mainly in the U.S. and fixed cost has increased. FT, increase of revenue by JPY 800 million. Profit increased by JPY 900 million. OLED and LCD, both solid. PE, minus JPY 300 million in revenue, minus JPY 200 million in profit, the recovery of the cutting-edge demand is delayed and both sales is solid. Now year-on-year. This is the third quarter's cumulative numbers. SPE, the revenue, JPY 383.9 billion; operating profit, JPY 100.9 billion; OP margin, 26.3%. GA, revenue, JPY 39 billion; OP JPY 3.2 billion; and OP margin, 8.4%. FT, revenue JPY 24.8 billion; the OP, JPY 1.3 billion; OP margin, 5.5%. PE, revenue, JPY 9.6 billion and operating profit is JPY 500 million. SPE had a big increase in revenue and profit, mainly in China. Foundry and Memory, increased mix also positive. GA, revenue increased, but profit decreased and recurring business is solid. Fixed cost has increased as well -- has increased. And FT, large increase in both revenue and profit. LCD and OLED, both increased and cost reduction activities has contributed to the increase of the profit. PE, here minus JPY 800 million. For the revenue, minus JPY 700 million of the profit and we expect increase of the equipment demand next year. The balance sheet, assets remains the same. Total assets remained unchanged. The cash decreased due to the transfer to the certificates of deposit. The total net assets amounted to JPY 415.9 billion, and the equity ratio improved as 61.4%. And that's for the cash flow. The third quarter operating cash flow is JPY 10.9 billion. The free cash flow is JPY 8 billion. And then the financing cash flow is JPY 12 billion negative. And then the Q-on-Q, the cash flow declined, there were advances received which are related to the Chinese customers and also interim income taxes payment. And so in full year, the cash can be generated same as the operating profit. And then the analysis of operating income growth, the cumulative. Last year, JPY 63.6 billion and the associated capacity utilization were positive by JPY 46.5 billion and the profitability of JPY 1.5 billion. And fixed costs, JPY 12 billion negative exchange rate of JPY 1 billion, and then the result was JPY 100.6 billion. And then the increase in sales and capacity utilization is attributable to SPE and FT. And then the increase in the fixed costs due to -- is mainly due to growth investment in SPE, labor cost, depreciation/amortization, R&D expenses and the exchange rates impacted GA and PE and the yen depreciation. So that was from me. Unknown Executive: Thank you, Mr. Kondo. Now the CEO, Hiroe, is going to talk about the business environment and the outlook. Mr. Hiroe, please. ?????: I'm going to talk about the business environment and the outlook. First about the business environment, SPE, the equipment. There is a trend of accelerating capital investments in cutting-edge semiconductors and by Chinese clients. As for the semiconductors, PCs, smartphones, servers, the investment and the growth rate has been slowing down. And in fact anyway, the -- all of them are making the positive growth. And on the monetary base, the AI accelerator is driving the growth. And as for GA, the business environment remains steady, particularly in the U.S., mainly POD. And the recurring business is also showing stable progress. As for FT, the OLED has driven the growth, but the investment in the LCDs remains steady, and we aim for profit growth next year as well. As for PE, despite the challenging performance this fiscal year, the various inquiries for next year gradually begin to arrive. As for the business outlook, this fiscal year, the full year forecasts has been revised further upward from October announcement. Net sales the OP income, ordinary income, net income, all of them expected to hit the record highs for the fourth consecutive fiscal year. And the year-end dividend forecast has been also revised up to JPY 163 per share. Total annual dividend is projected to be record high at JPY 283 per share. SPE business overview. I would like to starting from SPE market trends and outlook. In calendar year 2024, expected to end with around 9% growth. In the calendar year 2025, we expect around 6% growth. Concerning the Foundry, we expect the expansion of AI market, especially the cutting-edge nodes, the investment is expected to be accelerated. As for the Memory, the growth is driven by the AI-related investments, and this trend will continue in CY 2025 as well. Investment trends by application. Concerning the Foundry, the investments on cutting-edge nodes and advanced packaging are in progressing steadily. And with regard to logic, the investments are focusing -- going to be focusing on cutting-edge development. And with regard to Memory, the AI demand drives the growth and the investments for HBM are surely continued. And about the image devices, the industry-leading company and Chinese clients are showing the signs of resuming investments. In power devices and others, the demand recovery is slowing down than we had expected. Talking about the China market, the investment plans are continuing to be brought forward. And going forward, investments are expected to gradually stabilize and our expectations have not changed. Next is the composition of equipment sales by application. The -- In the Q3, in comparison on the Q2, the Foundry increased significantly. The Flash also rose. And the 3Q cumulative year-on-year, the ratio of sales to Flash rose significantly. And talking about post-sales, the overall sales increased. Therefore, ratio of sales decreased. However, the actual sales amount remained at the same level. In October, the balance between in first half and the second half was not announced, but more than we had expected. We are on the positive side. And then the leading edge investment and the Chinese investment requested to be accelerated, we were able to record sales due to these factors. And the composition of sales by destination. If we compare the second quarter and third quarter, as I mentioned earlier, the startup was accelerated. Therefore, the ratio of sales to China increased significantly, accounting for 49%. The [indiscernible] investment for HBM, the sales to Korea has also risen. And the 3Q cumulative year-on-year, the ratio of sales to China keeps growing at 47%. It's accounting for that big proportion. And the ratio of sales to Taiwan increased due to the investment in cutting-edge area. Next, the forecast going forward, the Q3 sales made a significant increase and -- led by the investment accelerated cutting-edge nodes investment and investments in China. In Q4, the request from our customers to accelerate their -- accelerating their [ sales ] has been made. Therefore, this trend will continue. And the October announcement and the January announcement difference, the second half sales forecast increased significantly from October forecast due to the request for accelerating Chinese clients and cutting-edge investment. And productivity improvement by S-Cube 5 was accelerated and so that this make a contribution. And as for the full year results over last year and the full year estimate of this fiscal year compared, the sales ratio of the Foundry is increasing, and that is driven by Taiwan and China. Logic investments forecast on development. So now the investments are [indiscernible]. This is the sales breakdown by destination. The third quarter's actual and the fourth quarter's forecast. Actually, the third quarter, we had the increase of the China sales ratio. In the fourth quarter, it is expected to decline a bit. But relatively speaking, Taiwan's ratio is expected to grow in the fourth quarter, and 22% is going to be from Taiwan. So Taiwan and China's rate are going to be balanced. And October forecast and January results. If you compare the 2, due to the request from the acceleration, there's going to be a big upside, particularly by region. China and Taiwan sales are expected to grow. So last year and this year, the full year comparison, including the actual amount of the sales, the Chinese rate is expected to grow. And as to GA, mainly from North America POD is driving the sales. That is the characteristics. And along with that, since recurring business mainly on ink is trending solidly. So looking at the fourth quarter's forecast, more than half of the portion is represented by them. And at the moment, we are developing new products. So next year, we would like to release them in order to drive our top line. As to FT. As I said before, OLED is driving the business, but LCD is also solid both for revenue and orders. So we are seeing the same trend next year as well. The demand trend or display is expected to be solid. In the first half, we were able to come back to the surplus. So in the second half, we are expecting to improve the profitability. So we should be able to accomplish the surplus for the first time in 3 years, and that's our target. As for PE. Given the miniaturization trend of the circuit board and the cutting-edge investments and recovery, it seems to be taking some time. There are some trends of the recovery, but it is taking some time. And post-sales trend is solid. So we would like to grow post-sales furthermore. So this is the business forecast of this year. So as to the actual of the third quarter, that's been already briefed. So I would like to give you some overview. If you take a look at the far right, this is the full year forecast revenue, JPY 616 billion, and operating profit JPY 126 billion; OP margin, 20.5% are expected; ordinary profit, JPY 127.5 billion, and the net profit, JPY 91.5 billion. So respectively, they are overshooting the budget. So we have made the upward revision. SPE is driving the growth. SPE's revenue, JPY 510 billion; operating profit, JPY 130 billion; OP margin, 25.5% and so compared with the previous forecast. And revenue-wise, there is an increase by JPY 37 billion. As to GA, the revenue of JPY 51.5 billion; operating profit, JPY 3.5 billion; OP margin's target is 6.8%. Again, in terms of the revenue, we are increasing by JPY 2.5 billion. As for FT revenue, JPY 37 billion, so some customers' projects are to be postponed to the next year. On the other hand, in terms of the profit, JPY 2.5 billion is expected and OP margin, 6.8%. PE revenue, JPY 14.5 billion and OP JPY 1 billion and OP margin 6.9%. We are struggling. The third quarter was negative, but in the fourth quarter, we'd like to improve. And as a result, we are going to work hard to accomplish those full year forecast. And other -- and adjustment, well, including the development in Holding revenue, JPY 3 billion and the OP is minus JPY 11 billion, and these are not changed from the previous forecast, and we are aiming to accomplish these numbers for the full year. Now R&D expenses and CapEx and depreciation and amortization. R&D, just like the previous report, we are planning JPY 33 billion. As for CapEx, depreciation is not -- consumption is progressing and some projects were postponed. And therefore, our forecast is JPY 28 billion. So this number was revised slightly. As to depreciation and amortization, it is JPY 12.5 billion. So these are the targets we are going to accomplish. As for the R&D, basically, there is the progress according to the schedule, mainly in SPE, we are going to implement strategic investments. But we also are going to invest in the new businesses as well. And particularly advanced packaging area; strategically, we would like to proceed with the investment. As for CapEx, it is going to be heavier in the second half. Again, mainly in SPE R&D, the manufacturing equipment are invested. In Hikone new building, this is a hydrogen-related building, and this is scheduled to be completed. So these are the scope of the CapEx investment. And this is the profit analysis comparing last year and this year. So last year, it was JPY 94.1 billion. The revenue increase and utilization ratio has added JPY 47 billion and profitability, plus JPY 2 billion and the fixed cost factor is a negative minus JPY 18 billion and the ForEx plus JPY 1 billion. So we are forecasting JPY 126 billion of operating profit, so increase of the revenue. And the utilization rate is driven by SPE and FT majority is actually contributed by SPE. As to profitability, the positive factor is the SPE. It is driving that number. As to the increase of the fixed cost, again, SPE is the main factor. Holdings new business is making the intensive investment as well, but they are both important investment for growth, and they are including the labor cost, depreciation and R&D expenses. As for dividend, for March 2025 years, dividend forecast is JPY 163 per stock. This is the upward revision. And therefore, the full year dividend is going to be JPY 283, and this is going to be the record high. So the consolidated dividend payout ratio target is 30%. So if you do the math, I think you'll be able to come up with these numbers. And other topics, they are included in the materials. So please take a look at them when you have time. Unknown Executive: Thank you, Mr. Hiroe. Now we would like to have a question-and-answer session. And the first is Yoshida-san of CLSA Securities. Yu Yoshida: Yoshida of CLSA Securities. You reported a wonderful financial results. And then the -- as for the WFE forecast of 6%, I would like to ask by application, what is the respective growth rate? And also the growth rate of China, what is your expectation? And the CY25, if you divide the first half and the second half, what is the height of the mountain? As for the WFE forecast, I would like to ask you. Unknown Executive: And Hiroe is going to answer to your question. The forecast for the 2025, okay? ?????: Yes. And as for the forecast for 2025, foundry is expected to be very strong. We expect the foundry is going to drive the growth. Taiwan foundry is the main one, but the Chinese foundry will also another factor to grow. And Logic is expected to be slower a little bit. And the DRAM in the memory, the investment is expected to be steady. And the NAND in the second half is expected to pick up. The weak area is Power area. The investment in Power is expected to decrease. And the entire Chinese market it is expected to be stabilized. And so next fiscal year, especially the first half of the next fiscal year, the WFE follows the calendar year, but our first half of fiscal year, the Chinese market is expected to be steady. And -- but for the second half, there might be some adjustment gradually. And throughout the year, the calendar year 2025, it's almost the same as 2024 in our expectations. Yu Yoshida: So what about the amount of height of first half and the second half? ?????: In the first half, the orders have come inside; therefore, we expect it to be steady. In the second half, it's a little bit uncertain. Having said that, there is some amount of orders are expected to be made. Therefore -- so first half and the second half, the first half sales is expected to be stronger according to the current situation. Yu Yoshida: The second point, in the midterm management plan, the growth investment progress and depending on the situation, you are going to make the flexible share buyback. And then the -- in comparison to the forecast, the capital investment is a little decreased. And then the performance is quite good. And under current situation, what is your idea of the shareholder return for the next fiscal year? ?????: In our policy, that 30% payout ratio will be maintained while keeping that flexibly, we are going to conduct share buybacks. And that is our policy, which was announced. And the contents of investments are being scrutinized. The various things have been visualized. And so accordingly, we would like to make a release to you internally when we have come inside and then we would take some actions. Unknown Executive: Next is the Morgan Stanley MUFJ Securities, Mr. Wadaki. Tetsuya Wadaki: This is Wadaki speaking. That was an impressive financial results. My first question, so the cleaning equipment seems to be doing extremely well. So what's the reason behind that? Compared with other equipment, it is doing especially well. So if you have any analysis, could you share the results of that? ?????: Let me take that question. So as for the cleaning equipment, since we mentioned in the previous IR Day, the more the miniaturization investment goes on, then more benefit we receive. Another point, advanced packaging area, in one sense, it required some special cleaning process. And therefore, we can collaborate with them, and we are commercializing our special technologies, and that is now leading or leading up to the business results. So that is our strength. So with the foundry customers, we are moving forward together, and that is actually driving our performance. Tetsuya Wadaki: So how much of the percentage of the revenue did you make from the cleaning equipment for the packaging application this year and next year? ?????: We are still looking into the numbers, and we are not yet announcing and disclosing the numbers, so we are still reviewing the numbers. At some point of time in the future, we should be able to share the information. I'm sorry. Tetsuya Wadaki: My second question, I think this is related to Mr. Yoshida's question. Not just your company, but to all the equipment manufacturers are receiving the request of acceleration from China and the revenue to China is basically very profitable. So next year, there could be some negative backlash. I understand that you can -- you have some visibility in terms of the revenue, but I am also still worried in the second half next year. And also the mix is going to be affected. So how would it impact on the product profitability improvement? ?????: Like you said, right, there is the acceleration of the project from China, and those are the projects with high profitability for us. So this time around, this has really contributed to the increase of the profitability. And towards the next year, that is going to be influenced. So we will have to take on new measures to improve the profitability. And we can't negate the fact that the business mix is going to be negative or is going to be worsened next year. However, our profitability standing has improved to some extent, particularly S-Cube 6 and the Hikone plant, various initiatives are now contributing to the profitability. So I think that we will be able to deliver the satisfactory profitability next year as well. Unknown Executive: Mr. Shimamoto of Okasan Securities. Shimamoto Takashi: My name is Shimamoto of Okasan Securities. I would like to ask about the WFE. I wasn't able to join the first half. I'm sorry if you have already talked about, I'm sorry about that. But the direction by application, what will be the growth rate, respectively, foundry, memory, DRAM and NAND and also Chinese market, would you give us more details? ?????: The respective growth of each application is under scrutinization. Therefore, I cannot talk about the detailed numbers, but the strongest growth is expected to be a foundry. Foundry, the investment themselves in the cutting-edge field is going to increase. And as I answered previously, the investment in the miniaturization would give us positive aspects, and that will be the driver. And the ratio of China is expected to decrease a little bit, and then that will become a sort of offset. And the major one is the -- those things. And it's common to WFE, a common trend to WFE and investment in memories. DRAM-related investment is expected to pick up a little bit. And the NAND as well, we expect some increase. And as for the numbers, we are going to examine further so that I can talk to you later. Shimamoto Takashi: Let me check. In the question of Yoshida-san, as for China, the last year and this year, I heard that the same level, what was the same level? ?????: I'm sorry, according to the WFE, the same level. Our share of sales is a little bit decreased. And WFE, you mean the same level in terms of the monetary value or ratio? Shimamoto Takashi: The composition ratio. So the monetary value is same level? ?????: Sorry, we haven't examined in detail. Shimamoto Takashi: And the second point, in relation to this, the concept for next fiscal year, you outperformed the WFE this year. And then you are very strong in the foundry. I think outperform is okay, but 2 consecutive years, is it really true to make such a significant outperform? And then for the next fiscal year, what is the probability of outperforming the WFE? ?????: Talking about the next fiscal year, we are still under study. And so at the next occasion, I would like to give you details. And for the sales, which was expected to be made next fiscal year has been shifted this fiscal year. It was accelerated. Therefore, by that amount, the forecast for next fiscal year, there is a some decrease. And -- but we would like -- we are considering the 10% growth. We talked about it in the last announcement, how we would like to achieve that level. However, our forecast is same level or higher. And we are going to scrutinize the budget, and we would like to make an update next time. Unknown Executive: Now next is Mr. Nakamura from Goldman Sachs. Shuhei Nakamura: First question, as to the performance of SPE business this year, the third quarter revenue was beyond JPY 150 billion. So actually, there is an increase of the production capacity as you first anticipated. So if this strong demand continues, do you think you can continue to ship this much every quarter and the production -- excuse me, the profitability in the third quarter, it is 27%. However, in the fourth quarter, it is going to come down to the 23%. So in the current environment, what would be the average OP margin that you can accomplish? ?????: So in terms of the production capacity, honestly speaking, it is not at the level where we can constantly sell beyond JPY 150 billion. In the third quarter, we did a lot of stretch so that we can keep up with the demand. So if we constantly have the demand for JPY 150 billion of revenue, then it is going to be tight. So in the fourth quarter, it's JPY 120 billion expected. And therefore, it is going to give us a bit of a leeway. And S-Cube 5 has been fully now operating, we are now improving the productivity continuously. So next year, maybe somewhere in the middle of next year, we should be able to have the production capacity that can constantly produce to achieve JPY 150 billion. So we would like to give you the updated information as per necessity. And in terms of the fourth quarter profitability is expected to decline, and it is because of the reduction of the revenue mostly. The actual profitability itself is not going to change that much. That's our anticipation. So in that sense, in terms of our capability, operating profit margin capability should be around 25%. So if it is around JPY 600 billion of revenue, then there's going to be upside. But if it is around JPY 500 billion double, then the OP margin could be around 25% or slightly lower than the 25%. That is going to be our actual ability. Shuhei Nakamura: The second question, again, about the way to look at the revenue of SPE business. This is a clarification question to the previous question. So at the moment, next year's revenue-wise, well, you are saying that it is going to be almost the same as this year. So you are saying that it is going to be same as the revenue performance for the year ending in March of 2025? ?????: Yes, the March 2025 year, we are expecting to have the JPY 510 billion of revenue. So either that level or higher than that is what we are aspiring for. Unknown Executive: Nakanomyo-san from Jefferies Securities. Masahiro Nakanomyo: Nakanomyo from Jefferies. Sorry to ask you the similar questions. But the 2025 WFE base, the China level is same as this year. But in the Q2, the financial report, you said that China is expected to go down around 20%, if I remember correctly. And then for the 3 months, China sales increased for -- instead of 2 to 3 months, but recently, Chinese investment, the inquiries are coming. And originally, it was expected to go down to the around mid-30% level. But this seems to increase a little more. When you mentioned for the past 2 years, the new customers of China made aggressive investment. Therefore, investment plan in 2025 was not so strong. I remember you mentioned that. But in recently, the situation has changed drastically. ?????: It's not that drastic, but they are a bit more active in my understanding. Masahiro Nakanomyo: On the other hand, in December, the U.S. new regulation was imposed and the many companies are listed in the entity list. What kind of impact that list would give you? ?????: At the moment, the comment hasn't changed from the previous time. In the U.S. entity list company numbers have increased; however, we follow the Japanese regulation for import -- I'm sorry, for export. And according to the legal guidelines, I'm talking about this. But we heard that and expect that the regulation will be tightened. And -- but to give you some comment on that, it's a bit too early, and I'm not in the position to talk about the trend going forward. Masahiro Nakanomyo: And so after the first half of 2025, you received accelerated investment. But in the second half of 2025, including the regulations, it's still uncertain. ?????: Yes, not sure about the regulations. So we are talking about excluding the regulations impact. If the regulations are newly imposed and then based on the regulations, what kind of impact will be given, I would like to share with you when it has been -- it's cleared. Masahiro Nakanomyo: And the second point, this is also a confirmation. The previous time, WFE is expected to increase around 10%. And -- but the WFE is 6%. And then your company is targeting the remaining the same. ?????: And so the relativity to the WFE is because this fiscal year's result is too strong. And the WFE is -- we expect WFE to land around 9%. We still have a fourth quarter. In that sense, along with the request of acceleration, we expect an increase in sales. In the third quarter, we had an increase. But in the fourth quarter, the -- even if we capture the -- some of the shift from the fourth quarter to the third quarter, but still, we have an increase, but that we get some decrease in the '25. Therefore, that we expect a little lower than we had expected. Masahiro Nakanomyo: And the WFE's number is a little bit tricky and the yen base trend is around, I think, FY '24 is around 25% growth. And WFE is 9% and then the increase higher than that, such benchmarking is not appropriate for benchmarking of the front-end forecast companies in Japan. ?????: Yes, it's a bit difficult for us to make a comment because it's a fact that, that is affected by the foreign exchange rate. So it's a bit difficult to talk from a viewpoint of Japanese yen. And this -- the WFE follows the dollar base and then they see the growth rate. And as you mentioned, the Japanese equipment manufacturers under the current foreign exchange rate trend, it becomes lower. Unknown Executive: And next, SMBC Nikko Securities, Hanaya-san. Takeru Hanaya: I am Hanaya from SMBC Nikko Securities. Well, the time is tight. So first question, I would like to ask about China. So your assumption is based on not really including the regulations. However, the customers are worried about the regulations and they are asking for the acceleration and the shipment is now happening in the third quarter instead of fourth quarter. So they are worried about the risk of no longer being able to purchase the product from you later. Do you think that is the situation? Have you been discussing that backdrop? ?????: Honestly speaking, we don't know. But probably what you have said could be right, that's our assumption. So we don't know yet what kind of regulations will be implemented. So earlier, the better could be the mentality. That is just our assumption. Takeru Hanaya: Second question, so the third quarter's performance was very strong. So if you take a look at the Q-on-Q, the revenues increased and profit increased. Compared with the revenue increase, profit increase was not as strong. So in the second half, I think you are going to increase your profit in the second half. Is that why? ?????: The valuation value, unfortunately, that has slided to the fourth quarter. That's right. So it is planned to be posted in the fourth quarter. In terms of the profitability in the third quarter, I would like to ask Miyagawa-san to make a comment. Akihiko MIyagawa: As to the profitability in the third quarter, so the revenue increase was much stronger in the third quarter compared with the profit increase. I think that was the question. Is this a correct understanding of the question, Hanaya-san? Takeru Hanaya: Yes. Akihiko MIyagawa: Okay. So Q-on-Q, the revenue increased by JPY 38 billion. Profit increase -- profit is increasing a lot, but it is JPY 11.9 billion. I thought that it could have been higher. Takeru Hanaya: Okay. Understood. Well, the first quarter and second quarter customer mix is the reason, and that's why profitability is not as strong as the revenue increase. That's all. So the second quarter was better. Is that what you mean? Akihiko MIyagawa: Yes, that's correct. Takeru Hanaya: So if the Chinese -- sales to China increased, well, in the second quarter and third quarter, the China sales representation has increased. However, the mix other than China was worsened. Or is it the mix change within China business? Akihiko MIyagawa: Well, within the mix in China, the new company's profitability is high. But if we have more business with the existing customers, then it is negative impact in terms of the mix and the profitability. And there has been acceleration of the cutting-edge business. Therefore, that had a slightly negative impact on the profitability. Unknown Executive: So it's time. So we would like to conclude the consolidated business results and forecast for FY '25 March third quarter ended December 31, 2024. Thank you very much indeed for joining today despite the busy schedule. Thank you so much.

Unidentified Company Representative: Good afternoon, everyone. Now we'd like to start SCREEN Holdings Financial Results Briefing on Second Quarter Fiscal Year ending in March 2025. Now let me introduce you the speakers from our side. Toshio Hiroe, Representative Director, President, and CEO. Toshio Hiroe: This is Hiroe. Thank you very much for your kind cooperation and support. Unidentified Company Representative: And Yoichi Kondo, Representative Director and CFO. And we also have two officers attending this meeting, Masato Goto, Senior Corporate Strategy Officer; and Akihiko Miyagawa, Senior Financial Strategy Officer. Now we'd like to invite CFO, Kondo to give us a summary of consolidated business results and the forecast. Yoichi Kondo: Thank you very much. I would like to present you summary first half earnings of fiscal year ending March 2025. First off, summary. Both sales and profits increased year-on-year. We hit record highs for first half in terms of both net sales and op income and margin. We revised the full year earnings forecast upward driven by SPE, GA and FT. We revised the annual dividend forecast upward from JPY233 to JPY247 per share with the interim dividend increase to JPY120 per share SPE. Both sales and profits increased year-on-year and net sales and operating income margin hit the record high for the first half. We expect a solid performance for the second half. GA and FT first half earnings actually exceeded the forecast. The cash flow in comparison with the first quarter, second quarter operating cash flow increased significantly. Next page. This is first half net sale JPY277.3 billion, Op income, JPY58.2 billion, 21% OP margin, orderly income JPY58.6 billion, net income JPY38.10 and no difference, plus JPY54.1 billion, net sale op income JPY19.6 billion and ordinary income JPY19.2 billion, net income JPY12.4 billion, by the outside you can see the percentage. Composition of group sales by destination. So Japan 14%, Taiwan 19%, China 40%, Korea 3%, other Asia 3%, North America 14%, Europe 7%. That is a composition of group sales by destination. 40% is recorded by China, so it remains very high. Group sales by segment is shown on the next page. SPE 81.6%, GA 9%, FT 6.5% and PE 2.1%, and FT was doing pretty well according to this results. This is earnings by segment. SPE net sale JPY406.8 billion, Op income JPY29.9 billion, OP margin 25.6%, GA JPY12.8 billion, JPY1.2 billion of Op income. Op margin 9.4%, FT net sales JPY9.3 billion, Op income JPY0.3 billion, Op margin 3.8%. PE net sales JPY3 billion, OP income 0.1, OP margin 5.9%. Earnings by segment, on Q-o-Q first. As to SPE, sales and profit increased. Sales to logic and post sales actually increased. Sales to Taiwan, North America actually grew. GA sales profits went up. Recurring business was very good. FT sales and profits increased. Initially, we forecasted deficit but in majority we had the profitability. PE, sales and profit decreased, both sales remain solid. However, the liquid sales was slow. So year-on-year SPE both sales and profit increased sales to foundry and memory increased and sales to China and Taiwan also increased. GA sales increased, thanks to strong recurring business. Meanwhile, profits remained almost flat due to higher fixed cost. FT, both sales and profits increased. Sales to LCD and OLED both increased. PE, both sales and profit decreased. We expect recovery in equipment demand in next year. Balance sheet. On a consolidated basis, asset JPY668.1 billion and cash and deposit increased and we now accumulated profit. The equity ratio is 59.21% and the turnover is 30 [indiscernible] and actually notes and account payable is [indiscernible]. Now cash flow, we saw the recovery of cash flow and we now see that that's [65.6] of our cash flow and reduction of payables, not on the same level of year-on-year level, however, we could see pretty good recovery and this is over the income growth. And the 2024 first half at JPY38.5 billion and 2025 plus 23 and profitability plus 30.5 and fixed was [indiscernible] and exchange rate plus 1.0 therefore results 58.2 billion. So we consider this very important to control fixed cost and SPE and FT very good in terms of sales and [indiscernible] increased and also profitability was increasing due to the SPE. And that's all from my side, thank you very much. Unidentified Company Representative: Thank you very much. Next President, Hiroe will talk about business environment and outlook. Mr. Hiroe, could you please go ahead. Toshio Hiroe: Thank you. This is Hiroe speaking. I would like to talk about business environment and outlook. First of all, business environment. As to SPE, AI related semiconductor is expected to drive growth that is a current situation and growth is expected in server, smartphone and PC demands. On a monthly basis, growth is prominent, especially for server and related investment are active. Current DRAM prices are degrading slightly. However, investment in minituarization still continues on the customers side. Next as well as GA is concerned, POD investment continues to progress steadily, mainly in Europe and US, especially included business, so thanks to improved utilization ratio on the equipment side recurring business is very robust. Display demand is turning up as we expected. In this term, sales and orders are expected to come mainly from audit during this fiscal year, like a large scale OLED and medium and small size OLED. As for PE, the recovery in package related investments is still slow. It will take time. So we consider that recovery have to wait until next fiscal year. Let's talk about business outlook. So the fiscal year ending March 2025 second half and full year forecast have been revised upward. Sales and profits are going to increase year-on-year. And net sales, OP income, ordinary income, net income all are going to shift record high for the first consecutive fiscal year as a result of upward revision of the forecast. As to interim dividend, JPY120 per share, that's our decision to make, so it's up JPY11 from the July forecast and JPY127 per share is the upwardly revised year-end dividend. Therefore, as a result, total annual dividend is projected to be record high JPY247. I would like to talk more about SPE business overview. Market trends and outlook is the next topic. So let's talk about WFE outlook. As to CY2024, mid-single digit growth is projected. So nothing has been changed since July meeting. In FY -- CY2025, stronger growth is expected. So I think situation will be a little better. As to foundry and logic, investment in leading edge nodes is accelerating. However, partially some reassessments are anticipated. Memory business, memory is driving the WFE growth this year. It is expected to be the growth driver in CY25 as well. We consider memory will grow more next year. Now investment trends by application. As to foundry, investment in leading edge nodes, including advanced packaging is now steadily growing. Next, about logic. Investment is continuing at a certain level although there are some reassessment and review in scale was made. As to memory, investment focused on DRAM for HBM. As to NAND investment, it's progressing with a growing server volume and the increasing demand from hyperscalers. Hyperscalers are actually driving the growth. As to image devices, investment remains rather low key this year. We expect an increase in CY2025. Power device and others is expected to recover in CY2025 due to the improvement in supply demand balance. Let's take a look at Chinese market. China. Investment continued at a certain level, that's how we project. But gradually, it's shifting to the factory launch phase, not a huge investment. Plant started to have a factory launch phase, therefore, investment will decline somehow. Now composition of equipments by application and post sales. By application on Q-o-Q foundry is on the decline, logic going on. And so actually, logic is supplementing the loss by foundry. In second quarter, second quarter year-on-year comparison that logic is increasing greatly. As to post sales, first quarter, second quarter, we see the actual percentage both increased. So from July forecast, there is a upward revision because of this situation. This shows the composition of [equipment] sales application -- destination. And [indiscernible] see the Q-on-Q in first quarter, second quarter, the proportion of China has declined. And against that North America, Taiwan and Europe have increased the situation we have. And when we compare the second quarter to previous second quarter, this increase was Taiwan and also North America. And this slide shows you the composition of equipment sales by application. And the first half year-on-year comparison shows the increase of DRAM and logic. So the recovery of DRAM can be seen in the trend. And when we compare the actual from the first half to the focus in the second half, the share of the sales to Flash is projected to rise. So in the second half of the year, we can expect the investment into Flash. And the previous fiscal year performance and the expectation for this fiscal year, as you see on the right side, the sales to logic, DRAM and Flash are expected to rise and the total volume is expected to increase. And this is the composition of sales by destination. So in the same way, when we compare the fast half year-on-year comparison, there's increase with Taiwan and also China. And the actual -- from the first half and second half expectation, the sales to China is expected to decline. But compared to the July forecast, when we see the current situation or immediate situation, we can say that in the second half sales to China is to surpass the July forecast. And while we see the increase in the sales to Japan and South Korea and the previous years’ full year performance and this year, we expect the increase was Taiwan. And China sales ratio is projected to decline but the absolute sales volume will grow. So this is the forecast for this fiscal year. And about GA, recurring business is very robust. So in the first half, the sales of the post sales ratio reached 54% and mainly with ink, we have a very strong recurring business. And in the second half, we will go back to the normal level of 50%. But we have the possibility that this strong situation with recurring business may continue. So we'll pay this close attention to the trend. And in order to improve the operating profit margin, we are trying to enhance this post sales. Next is about FT. Display demand is now turning up. So in the second half, mainly with OLED, we can expect the sales order -- sales and order to increase. And in the first half, we could turn into black. So for the full year forecast, we made an upward revision. So in order to make the profit for the full year, we're trying to make the better profit. And this is about PE. We are struggling with PE business. Costs of sales itself is strong but package related investment to circuit board will pick up next year and beyond. So there's a kind of delay in the recovery of that investment, that is the impression we now have. But now we have the inquiry in Japan. So given with these inquiries, we'd like to increase the order received. And on this page, you can find the business forecast, which was upwardly revised this time. So the sales is JPY577 billion. So that is the increase of 14% over the previous year. And operating income is JPY113.5 billion that is the increase by 20%. And net income is JPY80 billion that is increase of 13.5%. So we expect the increase of sales and profit. And about SPE, in the second half, which was announced in October, so please pay attention to October focused, that is JPY244 billion and that's JPY58.5 billion in OP income, [indiscernible] OP [Indiscernible]. We scrutinized this outlook forecast into the second half, that's what we promised we see in the previous occasion and begin the improvement of the profit in the first half and also with some visibilities we now have, we came up with these figures. So we made the upward division for the second half forecast and also resulting in the full year forecast upward division. And as for the GA, compared to the July forecast, there's almost no big no change. But there's a increase with the operating income that is because of the situation we now explained to you. And FT, I mentioned earlier that we turned into black in the first half. And given that in the second half, we're going to have a JPY2 billion of operating income. And PE, the market condition is still severe. So we made the downward revision of JPY500 million and it is difficult to increase the profit and sales with this revision and others at the very bottom. From the October forecast, we have the figure of the 5.5 billion, that is a increase because the development investment in the first half is now slated into the second half. The purpose of which is the investment for the advanced package and SPE related investment. So we direct you -- carry out this investment in a very proactive manner. And this is R&D expenses, CapEx and depreciation. And from the beginning of the year, we haven’t changed them. And midterm management plan, we said that we are going to scrutinize our investment for the future growth and this process is going on. So investment into development and also [acquiring] the production property we have been discussing them and now we have some visibility about it. So when they are materialized, let me come back with another report to you. And next page is analysis of operating income growth. So comparing to the previous year's performance, we have the focus for this fiscal year. So sales and capacity utilization will have JPY36.5 billion increase and profitability will bring JPY2.5 billion increase. And fixed costs, we expect negative JPY19.5 and so another 0.5 from the exchange rates total JPY130.5 billion is the forecast for this full year. And as you can find at the bottom, as for the sales and the capacity utilization, they mainly come from the SPE and FT, mostly they are from SPE. And as for the profitability improvement, it'll come from the SPE. And increase in fixed cost will come from SPE holdings new businesses and GA. But most of this will be with SPE. So the labor cost, depreciation, amortization, all of the expenses increase and we would like to make the -- close investment without increases of this cost. And this is about the dividend. As I mentioned earlier, and you can see the comparison to July. So in October announcement, we have JPY120 per share dividend and year-end dividend payment will be JPY127. So the total annual dividend will be JPY247. So this is the additional forecast but record high figure and in order achieve this we would like to continue to make effort. And this is the page about the ESG related initiatives, but please go through this and this page [indiscernible] topics out of these, that is about the transfer of shares of subsidiary in this SPE business. As was announced on October 16th, there's a transfer of shares of subsidiary, Laser Systems & Solutions of Europe in France. The shares of this company is transferred to Sumitomo Heavy Industries. The announcement -- the contract was concluded on October 10th and amount of transfer is not disclosed. And this is already incorporated into the financial forecast as I mentioned earlier. And this company, Laser Systems & Solutions produces the annealing equipment for the laser equipment and Sumitomo Heavy Industries' laser annealing equipment has a synergy with this company's product. So we decided that this result in an win-win relationship and decided to transfer the shares to Sumitomo Heavy Industries. And we have the technology of flash lamp anneal. So we would like to make efforts so that our flash anneal will be adapted by the years as much as possible. That's all from me. Thank you very much for your attention. Unidentified Company Representative: So President Hiroe, thank you very much for the presentation. Now I'd like to go into the Q&A session. Operator: First person, CLSA Securities. Yoshida-san, please. Yu Yoshida: First of all, the SPE for the second quarter. The sales to China was lower than anticipated and SPE sales, I think, some plan unachieved. However, the OP margin was pretty good but the post sales was pretty good. So could you please explain the situation about the revision of the OP income and OP margin? I think equipment cost will be better. However, in the second half, I think, there was some reduction comparison with the first half. So could you please explain the background? Toshio Hiroe: In the second quarter, the sales actually is a little bit different from July forecast, because some customers sale and delivery time was shifted to the second half. So that was reflected. So that's the reason for the difference. And in comparison with July forecast, OP margin was improved because post sales ratio was -- as post sales -- the share of the post sales was improved more than we anticipated, so that contributed to our profit. Another point I would like to mention is in the first quarter -- so we were talking about some evaluation of the machine that was shifted to the second quarter and that not be shifted to the second half, I think that was already communicated to you. So in the second quarter, we could not match the timing with the customer. So finally, the sales is slightly to the second half. So this is the reason why the upward revision in comparison with the July forecast. Another point, SPE related development cost. Development cost, we could not use as a plan then development cost will be used in the second half and that will be actually consumed in the second half of the year. So that is a major factor for the upper revision of the earnings in the first half. As for the second half, the China product mix will be unchanged. Percentages will be [entered]. However, product mix in China is actually changing. The percentage of existing customers is increasing and the percentage of new customers are on the decline. So we try to check the customers and market. We actually examine the numbers. So the number we presented this time is pretty appropriate and correct numbers. Yu Yoshida: Another question. So WFE, so you said that mid-single digit growth. So I think, it's a little bit better figure from the IR Day presentation. So what kind of application are you -- think about when you take a look at [upgrade]? And are on IR Day, you were talking about the two digit increase and you changed information. So do you consider still two digit growth can be anticipated? So how are you thinking about the next year situation? Toshio Hiroe: So as to WFE, current year 2024 that will be unchanged. As to calender year 2025, we have rather be [indiscernible] view, because DRAM will recover pretty well. I already commented of that. As to Flash memory that will also recover. So we are pretty good at the foundry. We also consider there the recovery in the foundry business. In the logic, the customers range from investment for logic. So we can subtract that number. And finally, we came up with that number, which is plus. As to DRAM, plus 15% or -- plus 15% and foundry plus 5% or so and logic minus 15%, that's how we forecast and meet one digit percent number as a result of that calculation. Well, as to next year's forecast, next year forecast is unchanged. So some [indiscernible] second and half sales is revised upward. Then next year's plan is to be evaluated and examined more in detail. But WFE will be strong, that's how we see the situation. So next year forecast is not changed. Yu Yoshida: So the actual number has not changed? Toshio Hiroe: Yes, that is right. So the similar percentage growth can be anticipated right now. Yu Yoshida: So gross ratio is not changed. Toshio Hiroe: Yes, that is right. Operator: Next is Shimamoto-san from Okasan Securities. Takashi Shimamoto: I'm Shimamoto from Okasan Securities. I have a question about the double FE, how to think about next year. One is about China. So about the front end process, there is a kind of slowing down in China. But with you that is not a cause of the concern. So I want to know more about how do you look the -- [indiscernible] have about China next year? Toshio Hiroe: So the question about China, we also expect that will slow down. I have been talking about China in the same way and this fiscal year we had better than expected situation. But next year and onward, the situation will go back to normal. I think adjustment will be made in that way. And at the bottom of this WFE page, you can find now there's a phase to start the new factories. And so they are now in the phase to enhance their production capacity. In that sense, another adjustment will takes place in China. Takashi Shimamoto: And I think there's a difficult question to answer, but how much negative or how much decline do you expect you brace yourself against for this fiscal -- for this calendar year or next year? Toshio Hiroe: Well, we are still making the investigation into the situation, so I cannot answer your question with specific figures. But more than 30% is expected. Takashi Shimamoto: The next is about DRAM. So you mentioned the price decline was DRAM. So do we have to see it's a big change in the situation? So would you comment on the price decline of DRAM? Toshio Hiroe: So about the DRAM price, there was the supply and demand balance and trade took place and the largest player in South Korea shifted their production to the commodity type DRAM that is -- that made in news on newspapers. So in that sense, temporarily there was a decline in the DRAM price. And from now, for the smartphones and the PCs, depending on the market situation of this, the situation related to the DRAM will change. I myself think this price drop would be a temporary one. Operator: Next, Nakamura-san from Goldman Sachs. Shuhei Nakamura: First question is about SPE Business. Add to the production capacity as to [S-Cube 5] [startup], how is the current situation? And JPY500 billion capacity is original plan. However, according to sales plan, the level has not reached that level. And what do you think about that, what is the attitude about that? And if demand further increase, to what extent you can cover -- you can actually deal with the next year's demand? Toshio Hiroe: Let me answer. SPE -- S-Cube 5 production capacity, with -- full capacity production is already achieved. So like a JPY500 billion level is available with our production system. Then when we think about the future course, S-Cube 5, in parallel, the production improvement is going on for that system. We're working for the production improvement. We try to capture more orders. So the second half order placement, in value wise, the more order will be captured. We do not expose the exact number, but we are aiming at the order captured at that level of more than JPY500 billion. Shuhei Nakamura: And the second question, the calendar year 2025 WFE. So [indiscernible] one month ago, your investment is [grinding] by some of the Korea customers, and I think you just reduced the value. However, according to the explanation, we feel that the DRAM is still strong and robust. Then in the past one year month or two months, what kind of change have you seen from your customers' side regarding the forecast, because you actually changed your forecast? Toshio Hiroe: Yes. Well, major customer rather bearish. However, HBM related customers' investment is now active. So that's how the situation is changed to the positive way. Shuhei Nakamura: In that sense, we consider a part of the customers may reduce the investment that was -- what you are thinking about, how different the situation is getting better for you? Toshio Hiroe: Yes, that's how we see it currently. Operator: Next let me invite Wadaki-san from Morgan Stanley MUFG Securities. Tetsuya Wadaki: My question is that they have high profitable business with China. And when the deal decline it was into next year you may suffer from it. So of course, there's a difference between the calendar year and the fiscal year. But how do you see this decline of profitable business in China? Toshio Hiroe: So we have the simulation internally and when we see the profit structure, we may have the one similar to that of this second half, that's how we expect for the next fiscal year. So we come up with this forecast for the second half this time. And profitability, if we can achieve this 24% as we expect, we think we can also target the same level in next fiscal year even with the decline of the Chinese China sales ratio. Operator: Mr. Yoshioka from Nomura Securities, could you please go ahead? Atsushi Yoshioka: I am Yoshioka from Nomura Securities. I have two question. So I may ask about China again. So three months ago, I think there are less inquiries from China, that's what you talked about. So in comparison with now and three months ago, how is the inquiry situation, how inquiries are changing? So could you please give us the latest information and also the sales in China to the second half of FY 2024? So like half of 2026, how do you think it will be changing? So could you please give me some more further information about China business? Toshio Hiroe: As to China market, we see the focus for the second half. So we have actually scrutinized the number and we came up with this number. So I think we will settle with these figures. So in the second half, 38% or so for China and we thought it will be lower, but it's a little better than final 38%. So this is the most recent situation. And the year ending March 2026 that to go down to 30% or so, I'm not sure how much we have to scrutinize this. And after that, I think, it will get to 30%. We consider 25% to 30% that with the leveled number for China. So we consider probably 25% to 30% is the final figure we reach that’s how we project. Atsushi Yoshioka: So this is the second half of this year. So you changed the information but you have more inquiries and you have foolish view. And second point SPE, OP margin or profitability. So most recently you have the upward revision because of the post sales increasing. So that's the reason you mentioned. And as to post sales, why post sales increasing? Is it any structural aspect or can we anticipate more for the second half? And could you please elaborate on why you have the post sales increase to have better results? Toshio Hiroe: Yes. In this case, the customers, we had a kind of the similar level assumption then. Just recently, there are some inquiries or the project change or additional purchase order of parts. So we do not see any particular reason for increase, but we aiming at 20% of post sales to share, that's what we are aiming at. And probably rather than the result of our effort, but thanks to the timing of the customers, we could increase the post sales. Operator: Mister Yamamoto from Mizuho Securities, please. Yoshitsugu Yamamoto: My first question is about SPE OP margin. So in the midterm management plan, no further increase of OP margin is not expected. So because of the increase of the fixed cost and also because of the mix. So in this time frame of the major management plan, we cannot expect the further increase for OP margin, or do you have any expectation to achieve the better results for the OP margin? Toshio Hiroe: So at present, as you said, the target of midterm management plan itself is almost achieved now. So we are now developing and also the investment for the [indiscernible] CapEx in order to achieve this figure, that's the target of the midterm management plan and there's no change in this concept. So this is a level we want to achieve. And in the next midterm management plan period, we have the intention to achieve the higher target, that's why we are making the preceding investment for the future growth. So we are in the second and third year of midterm management plan to carry out this investment. Yoshitsugu Yamamoto: So if you can see, expect the further improvement of the productivity as such as at S-Cube 5, can you expect a greater investment into the future growth? Toshio Hiroe: Yes, that's what we want to do. But investment for the development, of course, requires human resource and we have limited resource for development. So at some point, I think that level of investment will be settled to the one we have been planning. And the Laser Systems & Solutions share is now transferred to Sumitomo Heavy Industries. Yoshitsugu Yamamoto: And when you see your business portfolio, are there any other businesses you think it's better to transfer to the other companies? So do you have any other ideas to spin out or to divest part of the businesses? So what do you think of your current business portfolio? Toshio Hiroe: So in the previous midterm management plan, we reviewed our portfolio from various angles. And in the current midterm management plan period, we have some projects related to the business portfolio review, that's what I explained to you on the previous occasions. And this is related [indiscernible] and flash lamp anneal in evaluation with customers, we are strategically promoting our flash lamp anneal to various customers. So we could focus our results to the flash lamp anneal. And as for the laser annealing, we will let Sumitomo Heavy Industries with expertise and resources to handle it. And I think that will serve the better for the future of this Laser System Solutions of Europe, that's why we decided to transfer the shares of this company to Sumitomo Heavy Industries. Yoshitsugu Yamamoto: And do you expect more of this kind of transform or can we cannot expect… Toshio Hiroe: So could you repeat your question? Yoshitsugu Yamamoto: So Japanese companies do not make the official comment to review the business portfolios. But sometimes, it's a bit -- so there's not many cases that the company or subsidiary is transferred to other companies as a way to improve the business portfolio, but SCREEN Holdings did that. So are there any other cases you have in mind to transfer the shares of your subsidiary to other companies? Toshio Hiroe: So other than this, all the device of the business portfolio complete as for the ones we planned in the mid -- previous midterm management plan. So we are going to make the JPY80 billion strategic investment from now. So we'll move on to that phase of making investment to establish the new business portfolio. Operator: Nakanomyo-san from Jefferies Securities, please. Masahiro Nakanomyo: I am Nakanomyo from Jefferies. And first question, this is confirmation. In your presentation, the second half in comparison with the first half, there will be more purchase order increasing. So because of the recent situation, you see this kind of condition already like, in China, there's a decrease and stable in North America. But in Taiwan, business is active. So what is the breakdown can you please share with me? Toshio Hiroe: As to purchase order, we do not disclose the number. We cannot share with you the breakdown of the purchase orders we receive. But the total value of the order should be increasing, and that's how we see these recent inquiries. Talking about percentage, foundry is very strong. Share of foundry is almost 50% or so, that's how we project. And the situation will progress like this. Masahiro Nakanomyo: And second question, and again, about China. 42% China share will be getting down to 30% or so. I think it's about your sales, your company's share of sales. When we take a look at the whole WFE, it is considered that China business will decline. So when we talk about China, you said that new companies have less investment but existing company will continue the similar investment. But I think, you have powerful players or not powerful -- or you have account, which purchase a lot or accounts which don't. So I think China's customers are not so weak. So what do you think of your China sales in comparison with the whole China market? Toshio Hiroe: Well, it's a very difficult question and difficult issue to deal with. Rather than memory, logic is a area we have strengths. So the new customers or existing customers of the logic, from logic customers, we get a lot of purchase orders and we get a lot of inquiries. As to memory related business, we are not really strong. However, in the memory related business, I think the certain amount of purchase will be received. However, investment trend when we take a look at -- probably the memory investment will decline, that's how we see Chinese market mix. Masahiro Nakanomyo: So is it a positive aspect for you, generally speaking? What should we say? Should we say positive or not? Toshio Hiroe: Yes, for us, I think it's a good direction for us, better direction when we think about our portfolio. Operator: Next let me invite Mr. Damian Thong from Macquarie Capital Securities. And Damian Thong is the last person to ask questions on this occasion. Damian Thong: For next fiscal year's outlook, you said that the market condition maybe a little bit weaker than next fiscal year. You devised your plan. So where did you see the stronger situation than expected, is it with China or the foundry? So compared to the three months ago, where did you see the stronger situation? Toshio Hiroe: So as I answered previously, WFE forecast for the calendar year 2024 even we'll have plus 15%, Flash 15% and Foundry was plus 5 and logic minus 15. So these are the situation we expect. And your question is not about WFE… Damian Thong: The reason why I asked this question is that you have the big share, especially with DRAM and memory. You have the big share. So when you see the inquiries from the customers, your sales growth expected for next fiscal year, given the current market situation, do you think that your sales growth can be better than that of the market growth of the next fiscal year or next year? Toshio Hiroe: Yes, that's how we see the situation. So the better than the WFE market itself, we can achieve the greater growth. So the double digit percent growth is expected now. Damian Thong: And my last question is -- and new POR will be gained from now to increase the share. Do you expect this impact from that? Toshio Hiroe: So we are now increasing our market share at this moment. And because of the exchange ratio in 2023 the share was almost flat, that was the result we had. But in 2024, we can expect the increase of the share. Damian Thong: Thank you very much. That's all for me. Toshio Hiroe: So Damian-san, thank you very much for your question. I this now concludes the SCREEN Holdings financial results splitting and second quarter of fiscal year ending in March 2025. Thank you again for your participation despite your busy schedule. Thank you very much.

Operator: Hello, everyone. Now is the time, so let us start with the business results briefing meeting of SCREEN Holdings Company Limited for the term of March 2025 in the first quarter. Thank you very much for coming to this meeting, taking time out of your busy schedule. Now I would like to introduce our presenters, SCREEN Holdings Company Limited Representative, Director, President and CEO, Toshio Hiroe's. ?????: Hello everyone. I am Toshio Hiroe. Thank you for your time. Operator: Representative, Director, CFO, Yoichi Kondo. ?????: I am Kondo. Thank you for your time. Operator: And associated two directors are also with us today. Senior Corporate Strategy Officer, Masato Goto. Masato Goto: I am Goto. Thank you very much for your time. Operator: And the Senior Financial Strategy Officer, Akihiko Miyagawa. Akihiko MIyagawa: I am Miyagawa, thank you. Operator: Now from here, I'd like to ask Mr. Kondo, Representative Director to give us the presentation about the overview of the consolidated financial results. ?????: So I'd like to give you the summary of the FY '25 first quarter. First of all, compared to the same time of the previous year, we had the increase of sales and profits, sales and OP version, ordinary income and net income, as the first quarter, we hit record highs. And in the first half of the fiscal year and the full-year earnings and dividend forecasts were upward -- mid dividend were revised upward. And as for SPE compared to the same time in previous year, we achieved the sales and profit increase. And as the first quarter sales and OP, we hit the record high. And as a quarter, the OP margin achieved a record high. And as for the balance sheet, the equity ratio reached 60.5%. And this is the result of the first quarter. The net sales was JPY 134.2 billion, with OP income of JPY 27.7 billion, OP margin 20.7% and ordinary income, JPY 27.8 billion, net income JPY 18.2 billion. Net sales increased by JPY 34.5 billion and OP income increased JPY 14.3 billion, ordinary income also increased JPY 14.2 billion, net income increased by JPY 8.7 billion. And this is a composition of group sales by destination. Japan of 14%, followed by Taiwan 17%; China, 46%; Korea, 5% and North America, 11%, Europe 4%; and Other Asia, 3%. And this is the composition of group sales by segment. SPE accounts 83.6%, GA 9%, FT 4%, PE 3%. This is a situation we have by the segment. And this is earnings by segment. SPE net sales JPY 112.1 billion, and OP income JPY 29 billion and the OP margin was 25.9%. GA sales was JPY 12.3 billion, OP income JPY 0.8 billion and OP margin was 6.6%. And FT sales was JPY 5.2 billion, OP income minus JPY 0.2 billion and this minus was reduced and OP margins minus 5.0%, and PE net sales was JPY 3.9 billion and OP income is JPY 0.5 billion. And this is a consolidated earnings by segment analysis year-on-year and Q-on-Q. First with the Q-on-Q, SPE decreased in the profit and sales, but operating profit margin improved. Logic sales rose slightly above foundry, sales remain steady. Sales to North America declined, but sales to Taiwan increased. In GA, both sales and profit increased because of the recurring business remained solid. In FT, both sales and the profit decreased. And from now, we can expect the recovery with OLED. In PE, sales decreased, while OP margin maintained at least 10% range. So the OP margin was flat. And as for the year-on-year result, SPE, sales and profit increased sales to DRAM and Foundries increased. And sales to North America decreased and sales to China increased. In GA, sales increased, profits decreased. And recurring, especially ink sales increased. In FT, sales increased and operating loss reduced. In PE, both sales and profit increased. And sales of the direct patterning system increased. Next is about the balance sheet status. First of all, about the total asset that is JPY 632 billion, and with the -- and liabilities and net asset. And as for the notes and account payable and other debt decreased and that include the contract liabilities. And this increased so the side of the asset be cash and deposits decreased and the liabilities increased. And on the other hand, this is the inventory and our current assets increased. And as for the fixed asset or noncurrent assets increased and as a result, the total asset was decreased and the equity ratio improved to 60.5%. That is because of the introduction of the shorter payment terms. And this is a cash flows. In the first quarter, the operating cash flow was minus JPY 32.1 billion and existing cash flow minus JPY 7.9 billion. Free cash flow JPY 40 billion and financing cash flow was minus JPY 13.6 billion. And because of the decrease in notes and accounts payable with a shift in payment schedule due to the holidays at the end of the first quarter and operating cash flow for the first quarter landed at minus JPY 32.1 billion. And there's also a decrease in the contract liabilities. It is the situation we have the cash flow but with the downsizing the balance sheet measures, so the picture we now have is a minus. But for the full year, we'd like to have the profit level of the cash flow. So I'm not worried about the situation. And this is an analysis of operating income growth. So in the first quarter of the previous year, income was at JPY 13.4 billion, and we have the increase of the sales with a JPY 14 billion impact and profitability increased -- improved by the JPY 5.5 billion, but there was an increase of the fixed cost by the JPY 5.5 billion. And there was an impact on exchange rate, about JPY 0.5 billion. And so the total is JPY 27.7 billion. And as you can see at the bottom, the sales increase and capacity utilization is mainly due to SPE. And the profitability increase is also mainly with SPE and the increase in fixed cost is notably due to the growth investments in SPE labor cost, depreciation, R&D expenses. The impact of exchange rate was biggest in GA and also and in PE. And that's all from me. Operator: So thank you very much, Mr. Condo. And I'd like to invite to President, Hiroe to talk about the business environment and outlook. So Mr. Hiroe, microphone is yours. ?????: So I'd like to talk about the business environment and outlook. And as for the business environment, you can see the environment for each business. And so starting from SPE in calendar year 2024, as for the semiconductor market, AI-related demand is expected to drive. And as for the consumables, PC, smartphone and server applications, on a monetary basis, we can expect the growth. GA business environment, the largest industry exhibition, drupa was held in Germany and successfully completed. And we expect that contribution from this exhibition to earn net sales growth from now. And display market, the panel price has been rising. So demand has turned up as we expect. That is the current situation. And for this fiscal year, the orders expected to come mainly for OLED application during this fiscal year. And for PE, towards the miniaturization of the circuit board, investment for the packaging is expected to take off, but it takes some time now. So in the second half of this fiscal year, we can expect the order place for this. And as for the business outlook is announced today for this fiscal year, that is a full-year forecast and first half and full-year focus have been revised upward. So sales and profits to increase year-on-year. And the interim dividend focus has been revised upward for this fiscal year. The total annual dividend is projected to be record high at JPY 233 per share. And this is the business overview of SPE, so WFE. So the calendar year 2024, mid-single-digit growth was projected, and we have to change this deal. So for the calendar year 2025, further growth is expected. Further growth can be expected greater growth can be expected in calendar year 2025 than in calendar year 2024. As for Foundry and Logic, investment in leading-edge nodes is accelerating at this moment as expected. And as of memory, the WFE growth this year will be led by the Memory. So DRAM may start to perform strongly now. And gradually, we expect investment will be made into NAND too. And investment trends by application to Foundry. The investment into the leading edge is steadily growing. This is a current situation. And as for the logic, installation in new factories is in progress. In memory, the investment is focused on the DRAM for the AI application. That means HBM. And the demand from hyperscalers is expected to grow. So NAND investment will resume gradually. That's how we see the situation. And Image Devices, the additional capital investment is cautiously taken account. So there is a slight decrease. In Power Device and Others, investment expected to remain low key during the calendar year 2024 due to the supply-demand balance. And as for China market, still a robust investment is continuing both for the emerging and existing chip manufacturers. So for the mature node, robust investment is being made by the emerging and existing chip manufacturers. And for SPE, this is the composition of sales by application and post sales. So for the first quarter, by application or Q-on-Q situation is that foundry increased and Logic slightly increased. In Flash, CIS and others slightly decreased. That's the situation. And year-on-year, the first quarter comparison as DRAM increased slightly and also the foundry increased slightly. You can tell that from the slide. And as for the post sales Q-on-Q, the actual amount decreased a little bit and proportion maintained. And next is the composition of sales by destination. In the first quarter, data is available here, so we can make the Q-on-Q comparison. And the proportion of Taiwan greatly increased. And China also increased its presence. And on year-on-year comparison, China compared to the first quarter of the previous year, increased by more than 2x. And next is the by application and post-sales forecast. So from now, the second half focus is also added, so please refer to it. And actual of the first quarter and the forecast into the second quarter, the Logic and others expected to increase. And the foundry will increase. And the first half forecast and second half forecast when we compare them Flash and Other post sales are expected to grow. That foundry will slightly decrease from 47% to 39%. And for the full year, so from the previous year, full year result and the full year focus for this year, Logic and DRAM will increase. And so there's a change in the mix. And the half and second half proportion when we compare these, the Foundry will decrease but Logic, DRAM and Others will increase. And at present, this is a focus we have about the application. And next, this is the sales destination focus. So the first quarter results and the second quarter comparison is made compare, you can find that the China will decrease from 51% to 44%. And North America, will increase. That's how we expect the situation. And the first half forecast and second half forecast when we compare them, China will decrease greatly. So on the previous occasion, when we talked about the forecast, I talked about that, we expect Chinese proportion will decrease from now. And as expected, in the second half, we expect a smaller sales from China. While we see the increase in full year and others. And whether you see the full-year forecast, we can see that Taiwan expected to rise. So when we compare the first half and the second half, Japan will increase, but Taiwan and China will decline. And South Korea and Europe will increase. That's how we see the situation. Next is the sales trend and forecast for GA. So both for the first half and second half recurring business has been progressing stably. So [ Korea ] are going to invest in the development so that we can accomplish. The OP, same as last year. Orders coming via drupa. I think it is going to impact our revenue in the second quarter and third quarter. So we are going to focus on that. As to FT, like I said before, displays demand is now showing the sign of recovery. The OLED related investment, the 8.5%, so large investment is expected. And therefore, going forward, basically OLED is expected to drive the revenue growth. In the first half, we have compressed the amount of the deficit. So in the -- for the full year, we would like to accomplish the [indiscernible] for the first time after 3 years. PE, like I said at the beginning, we are struggling a little bit. The packaging Board investment for the miniaturization is anticipated in the second half. So basically expecting the growth. We have launched a new product called Ledia Qs. So this is a system that much is demand. Post sales is progressing quite steadfastly. So we would like to generate revenue from post sales in the second half, main body growth is expected. Now given the situation, this is the forecast of our performance. So we have revised them upward and compared with the May announcement. In July, we have made a revision. You can compare them side by side. In the first half, you can see that there is revision upward. In the second half, the details are not hammered out there, but we haven't revised them in the first half given the situation of the first quarter. Total first half forecast was revised with revenue, JPY 280.5 billion and OP is JPY 53 billion. So this is by 18.9% and ordinary profit, JPY 53 billion and the net income, JPY 35 billion. And the second half forecast are not changed. So basically, the full-year revenue is JPY 564.5 billion and OP is found to be JPY 105 billion, OP margin 18.6% and ordinary profit, JPY 105 billion. Our net profit is going to be JPY 75 billion. So this is an upward revision. For SPE, the first half numbers is JPY 233 billion for revenue or sales. So this is the upward revision by JPY 3 billion. As for operating profit, JPY 57.5 billion, again, coupled with revision OP margin 24.7% is anticipated. As for GA, JPY 24 billion for sales, OP JPY 1.5 billion, OP margin, 6.3% is the target. And these are not really revised up. As for FT, the deficit volume is going to be minus JPY 500 million against the revenue of JPY 14.5 billion so this is upward revision. As for PE, revenue is a bit of struggling. But in the second half, we are going to focus more on. So in the first half, JPY 7.5 billion of revenue and operating profit forecast is JPY 500 million. There's going to be heavier profit in the second half. So as such, we have made the upward revision of the forecast. Now R&D, CapEx and depreciation/amortization in the first quarter, R&D, JPY 7.1 billion; CapEx, JPY 5.8 billion, depreciation/amortization, JPY 3 billion was spent. As for R&D, SPE is the mainstay for the strategic investment and also we have been leasing up the investment for the new business areas, such as ADPKG and hydrogen-associated. And as for the CapEx, we are mainly investing for the SPE in Hikone and new plants and so forth. For the full year, we haven't revised the numbers. So for R&D, JPY 33 billion, CapEx, JPY 30 billion, the depreciation amortization, JPY 13 billion. Now this is the waterfall analysis of the operating income. So the starting point is the JPY 94.1 billion at the end of last year and our forecast for March 2025 is JPY 105 billion. So the increase of the revenue and improvement of utilization would give us a plus JPY 33 billion. So majority of the increase of the profit is because of this element, via the increase of revenue on the utilization and profitability contribution is zero. The factor of fixed cost, minus JPY 21 billion. The ForEx negative impact is JPY 1 billion. The final focus is JPY 105 billion. These numbers are rather small payer profitability improvement. Basically, we anticipated it to be plus JPY 1 billion, but it has been reduced down to zero and therefore, we have reduced the FX cost to offset that. As for the revenue increase and utilization, mainly this is driven by SPE and FT is also going to contribute as for the increase of fixed costs, mainly SPE is the reason and holdings growth investments are the main reason. So these are the purpose for the investment or the expense. Now next is about the dividend outlook. The interim dividend forecast was revised upward. So fully our dividend is going to be JPY 233 and this is going to be the record high. On the right-hand side, you will find a table, the main announcement was interim dividend JPY 100, but we have raised it up to JPY 109. As for the second half, we didn't imply the numbers. So in total, we expect to aim to accomplish JPY 233. On the right-hand side, you can see the actual numbers from the previous year, March 2024. So the dividend is going to be increased from the previous year. Now about ESG and group revenues and new product topics also included in the material, but due to the time constraint, I would like to ask you to refer to them later when you have time. Operator: Thank you very much, our President, Hiroe. Now we would like to open Q&A session. Operator: Now I would like to ask the first person, Yoshida San from CLSA Securities. Yu Yoshida: For the outlook of SPE in the second half, you didn't revise the numbers for the second half. On the other hand, by applications and variations, the breakdown information was provided. So towards the calendar year 2025, actually, the numbers are growing, I guess. So I think there is some upside. So with what kind of applications or region, where do you think there are still to be an upside? ?????: Okay. I, Hiroe, I am going to answer your question. Well, at the moment, we haven't yet worked out the details of the second half. And therefore, we just showed the forecast for the full year -- just the forecast. But basically, the customers have given us inquiries. And based on that information, we made this forecast. So there is some upside, but there is also going to be some downside as well. But in particular, the most advanced foundry-related investment, this could come in, and that could serve as an upside driver. And memory associated business, well, we think that the investment for NAND would increase, but the degree of the increase is going to be the source of upside. Yu Yoshida: I see. By regions, for example, China and region from a region perspective, are there going to be any upside or downside? ?????: About destination, the ratio of sales to China in the second half will depend on how far we accept orders with an eye on the production capacity going forward. Yu Yoshida: Now my second question, so SPEs margin forecast towards the second quarter is my question. So in terms of Q-on-Q, the revenue is going to go up, but the profit will go down. So is it because of the customer mix and the region mix? Is that the reason? And in the previous meeting, you talked about the low margin as you recall which will be posted in the first quarter or second quarter. And low margin business, so when would that be posted? ?????: So comparing the first quarter and the second quarter, there is a bit of the decline. And basically, regional mix and customer mix, both of them are offering some role. Another point, like you said, in the first quarter, there was this evaluation equipment we wanted to deliver to the customers. However because of the customer situation, we had to shift that to the second quarter. That's another reason why first quarter was higher than we expected. Operator: Next, I'd like to invite to [indiscernible] from Morgan Stanley. Unknown Analyst: Thank you very much for the explanation. And under the leadership of Hiroe san, we do not have any surprising releases. So happy about that. But there is a risk with China. And in your case, you have a very careful attitude to that, so we're not to worry about that situation, but what impact this China situation will have? So do you see any political impact to? Or do you see any increase of the CapEx in China? So what is your forecast after next year about China? Operator: So Hiroe will answer your question. ?????: So about China, at present, we have the inquiry, which is not so weak compared to the past. There are some fluctuation in inquiry. But for us, still, it accounts for more than 30%. So I think we can maintain this level of business for China and 40% is a very high percentage. So 40%, 50%, not China comes to very large portion of ourselves. And as we have been saying that we expect this figure will decrease from now. So that is the trend we expect. But China still will continue to be the main customer for us. Unknown Analyst: So what is expectation until the next fiscal year? Do you expect more slowing down of China business? Or do you go [indiscernible] it? ?????: So for this fiscal year, as I mentioned now, we don't expect it will decrease so much. But until next year, more than 30% order has been placed with us from China, and we think that the situation will continue into next fiscal year. Unknown Analyst: And next question is about by application -- Memory or NAND. The memory manufacturers are now shifting to the HBM. And I think the investment for NAND is placed backward. So when do you expect the investment into NAND will recover? And do you have any visibility into that? ?????: We thank you very much for your question. About investment into NAND, the hyperscalers investment into server should accelerate. Without that we cannot expect recovery. So still now, there was not much movement taking place. And NAND itself will recover maybe in the second half or in the latter half of the fiscal year. Unknown Analyst: And your expectation is based on actual inquiry from the customers? Or is this focus from the market? ?????: Yes, we already have some inquiries received, but they are not finalized. The finalizing been clearly taking much -- a little bit more time than usual. So that's how we see the situation. Operator: Next from Goldman Sachs, Nakamura san. Shuhei Nakamura: I have two questions. First, it is about balance sheet. The compared with the end of March and June, the amount of the contract debt has come down by JPY 3 billion. Is it because of the reduction of the new orders? Or this is due to the balance between the new orders and shipment. How come it has come down by JPY 3 billion? Operator: Kondo is going to handle this question. ?????: This is Kondo. Right, the China's projects are probably the prepaid project, was sold. And revenue to China is posted according to the schedule. Shuhei Nakamura: So the -- do you mean that the order is smaller than the revenue? ?????: No, the prepaid amount was reduced because that was converted to the sales. So it is not having to do with the amount of the order. President is going to answer the question about orders. We expect more orders coming from China going forward. So towards the end of this year, we're not worried about the cash flow. At the moment, the cash flow is declining, but we're not worried. He said that in the presentation. So basically the prepayments will continue to come from China. That's our anticipation. Shuhei Nakamura: My second question is about the regulations. I don't know what kind of regulations are going to come in. But let's say that the FDPR regulations are utilized by the U.S., than your equipment. Can you ship your equipment without using any components or technologies protected by the U.S. IP? Is it possible? ?????: We are not in the place to make a comment about that. So because of the background of our equipment, we do -- with regards to the point whether we use any components and technologies from the U.S. well, if we have the amounted to chips, then that means that we do have the technology from the U.S. So because of the way we manufacture equipment, we cannot make our products without using American technology. So far, we have been sticking to 30%, but we have to continue to monitor how things will play out going forward. Operator: Now I'd like to invite you Mr. Yoshioka from Nomura Securities. Atsushi Yoshioka: I have two questions. First of all, about China. So you only explained this, but let me ask this question again. So are sales of the [indiscernible] standard, with the point of my concern. So in the fourth quarter of the [ '22 ] there was more than JPY 60 billion of sales. But for the second half, this will increase to JPY 78.2 billion. So on a quarterly basis, sales will drop to about JPY 39 billion. And on this point, do you see any change in the demand? I think you mentioned that there's no big change in demand. So basically, it is because of the capacity. So maybe you are trying to use production capacity for some other future demand. So the drop in the second half, would you explain how do you see -- how do you come up with the expected drop in sales to China in the second half? ?????: So what makes the comparison of the previous fiscal year. China, inquiry is now a little bit lower than the previous year. That is actually the situation we have. But we can't sale order only when we finalize it with the customers. So we are not trying to find out the exact delivery of -- the delivery time of the order to the customers. So there are some orders relating to these transfer. Atsushi Yoshioka: And second question is about the WFE market. So how do you see this WFE market? ?????: So in 2024, there was no change but on the other hand, the investment in the foundry is expected to increase or accelerate. So there are some up and downs. But would you give us more detail explanation and the further growth is expected with SPE. But when we see these figures in the midterm edition plan, you expect to be 8% cost with the WFE market. And from this 8% growth, do you have any kind of [ upward revision ] of the gross expected WFE for the 2024 and 2025. Atsushi Yoshioka: So how do you see the growth of the WFE market? ?????: So for F 2024, the mid-single-digit growth, a little bit less than 5% was the image I explained to you. And that view itself hasn't changed. And for the 2025 at present, we expect the growth because of the inquiry we now receive. So the image of 8%. I think that's the one you have now. But at present, we can have the stronger than 8% growth. And as of the Foundry and Logic, the investment into the leading edge is expected to accelerate. That's how we see -- how you see on the Screen. But to calendar year 2023 and 2024, the investment into the Foundry will be in the same level. So the [indiscernible] investment into the leading edge will account for the large portion of the investment. Atsushi Yoshioka: So 2025. So you said that you see the stronger -- situations are getting stronger. That application is getting stronger. That can I understand the situation that way? ?????: So memory, will -- is expected to get stronger and significant. So that's about calendar year 2025. So in 2025, we will catch the demand from that sector. Operator: Next is Shimamoto san from Okasan Securities. Shimamoto Takashi: My first question. So going forward, the China businesses representation is expected to decline. How will that impact the profitability of your business? That's my question. ?????: So basically, that's not going to give too much impact or I get the impression that the newly emerging manufacturers actually give you very high prices, what is going to affect our profitability. As to Chinese manufacturers, it is true that our profitability with them is high. So by having a small representation of the Chinese business, is it possible to assume that the profitability could also decline. However, as to the new equipment we are going to sell, we are going to appeal our added value, that's our strategy. Therefore, through that approach, we would like to recover our profitability. So we would like to develop such products that can improve our profitability. So along with the reduction of the China's representation in our business still, we would like to manage our business so that the profitability will not be compromised. Shimamoto Takashi: As for the memory investment, you are anticipating the recovery from NAND. So at the moment, memory, the largest manufacturers, they are not really big, your market share is large. However, what's the current status of the adoption rate in them? - ?????: We cannot really discuss or explain about our situation with a specific customer. But if I give you some general explanation as for the DRAM, as cleaning equipment, we are now increasing -- we are not really increasing our exposure. However, with F&A, we are now developing new applications. So this is where we would like to create more business opportunities. Operator: I would like to invite Mr. Shibano from Citi Group. Masahiro Shibano: Let's talk about the margin. In the first quarter, the sales dropped by Q-on-Q, but margin improved [indiscernible] that's the explanation you've given us. And the sustainability of that margin. So how do we understand sustainability of this margin? So we have been hearing about drop in China presence in the second half of the fiscal year. So thing they expected a 2% drop. And do you think that this is a practical expectation? Or do you take any measures to prevent the drop of the margin. So how do you think of the margin? That is the first question. ?????: So into the second quarter, given the situation or results of the first quarter, we are now making the analysis of it. So as for the figure for the second quarter, of course, we are going to achieve the better ones. So that we can achieve the better result than the forecast. But I think this expectation is very practical. That's how we see the situation now. And as for the second half, we don't have the order finalized yet. So we haven't made the detailed analysis yet. So this is a -- we have committed to this figure, but whether or not we can achieve the better than this year will be based on the analysis we are going to make from now. So please understand the figures in that way. Masahiro Shibano: My second question is about how we see the next fiscal year. So WFE have the memory as the kind of driver for the product growth. And I think that corresponds to a kind of general way to see the market. And your SPE sales and WFE in [indiscernible] when you see and compare the growth. Your sales growth may perform the total industry growth, for example, if China continued to support your growth now. So the WFE growth maybe mainly was memory. I think you can have a scenario to outperform the market growth. So how do you see the growth into the next fiscal year? ?????: So let me answer your question. So on the previous IR Day, we explained to you that we, along with the miniaturization I think we can expect a further greater exposure, and we are going to challenge the new PORs. And result of which will contribute from now and gradually. So for this fiscal year, our market share according to our own calculation is expected to grow. So if there is any big drop in WFE to grow the market share, it would be difficult. But as long as we comprehend the situation, we can expect our market share will continue to rise, especially investment in China is into the legacy node. The customers of legacy node concerned, especially front-end cleaning proportion is greater. And this will result in the greater contribution -- to make a greater contribution to our market share. Operator: Next is Nakanomyo san from Jefferies Securities. Masahiro Nakanomyo: I have two questions, but this might sound like a repetition of the previous questions. But in terms of the capacity, I have yet another clarification question. So at the moment, there is still a constraint of the supply. It's not resolved completely. That's what you said previously. So looking at the numbers in the first half and second half, SPE sales is almost flat. But this year S-Cube 5 will start its operations. So basically, it has a potential to sell JPY 500 billion. So if that's the case in the second half, maybe the revenue of JPY 250 billion is possible. Is this correct? So according to the current plan, it is JPY 230 billion. Do you think there's going to be an upside to this number? ?????: You're right. S-Cube 5 equipments are now being installed. So we would like to reinforce that. And as to the current situation of the order -- incoming order, it is quite strong. The order is robust. So against this target of JPY 230 billion gradually, we would like to increase the number of orders so that we can pursue upside. If that's the case, in that situation, at the moment, China is not fully incorporated but would you say that the China's representation is going to increase. So looking at the first half and second half, as of now, the China is expected to decline quite substantially. But as long as the capacity is ready, the situation is going to change? Is that what you're saying. But compared with the first half, it's going to decline. However, the degree of the drop is going to be mild. Masahiro Nakanomyo: My second question is about China next year. So you explained that the Chinese representation is going to shrink. But when you look at the absolute amount of the revenue, the China's investment and your revenue, when you separate them out compared with this year, do you think it is going to go up, when you look at the absolute amount of the money? ?????: I think it is going to decline still -- this year, I'm sorry, this year compared with the previous year, some of the business was sort of shifted to this year from previous year. So that is some portion that was added. In that sense, next year, the situation will come back to normalcy. That's our outlook. Masahiro Nakanomyo: I think you're talking about your revenue. But if you take a look at the total investment and market in China, what is your outlook. They are quite robust and vibrant. That's true for sure. So there's a bit of a gap. Would you say that there is going to be a bit of an increase in China? ?????: Well, legacy area or batch cleaning area in these segments, our market share has been eroded, and that is true. So in those areas, gradually the localized will progress. That's our anticipation. Operator: I like to invite Mr. Hirakawa from the BofA Securities. Mikio Hirakawa: I am Hirakawa from BofA Securities. I have two questions. First, about the profitability. So in the -- mainly in the first half, you revised the focus on SPE and sales expected by JPY 3 billion and operating profit is expected to increase by JPY 4.5 billion. And -- so the great expect -- greater growth was expected towards the operating profit. So I want to know why you expect a greater growth with the operating profit than the sales? ?????: So as it is not only by the SPE alone and also in the other businesses, in the past quarter, we had very stable recovery in the profitability. And this situation was analyzed for the second quarter and we can expect the contribution from the other businesses into the sales in the second quarter. So rather than SPE, when we have the three other businesses and others, we can expect the -- should expect the improvement of the profitability. That's why we made this upward revision. And of course, SPE part of it. And as for SPE, the production mix was better than expectation. As for the testing machine about [indiscernible] was made, it is not delayed into the second quarter and after. And SPE in the first half, the operating profit is expected to increase by JPY 4.5 billion. Mikio Hirakawa: Next question is about Page 11 about the profitability to increase by JPY 5.5 billion. And I want to know more about this profitability improvement. And the total increase of profitability for the full year is zero as we see on Page 24. So the one on the first quarter is most in the full year. I think figures should be accumulated. So I want to know the relationship between the first-quarter profitability and full-year profitability. ?????: So for the full year forecast, so our original look for the improvement of the profitability was based on the product mix. And also the customer mix. But now we see that situation does not allow us to have that improvement. So we have to cut or reduce the fixed cost to cover that. That's how we are operating the business right now. So that means in the first quarter, you have some improvement of the profitability, but that's the last because of the situation -- a different situation in the customer mix and the product mix. Yes. So that is the expectation for the full year. But that is without any detailed analysis. So we made a data analysis up to the second quarter. But as for the second half of the fiscal year, we haven't made the exact or with a detailed analysis. Operator: So next person is going to the last person from UBS Securities. Yasui, please ask your question. And this is the last question we're going to take. Kenji Yasui: I am Yasui from UBS Securities. I have two questions. First one, I'm sorry. I'm still sticking to China, but I have a question about China. As to the revenue breakdown in China. The advanced node investment is a bit hard to understand. So I understand that it is difficult to clearly answer this question, but how much of the revenue is from the advance area? Would you say three or four top manufacturers make up the 30%, 40% of the total revenue or even more like 15 companies. And the image device, second question is about image device. So for the full year, there is the substantial decline forecast compared with the initial forecasted actually, initially, your outlook was not so negative. But in the past couple of months, whether the investment dropped substantially. Could you give me a little bit more details about that. Could you elaborate why the outlook has declined so much? ?????: As for the breakdown of the revenue in China, well, major players, the big players are making investment. As of now, we don't have much connection with a CHIP Act. So legacy level investment is taking place. So along with the METI's guideline, we are developing our business in China. So when -- there is a timing when the big customers make an investment, then our business also increased accordingly. As for the [indiscernible] sensor, like I said previously, it is going to be a slight decline and listening to the customers' investment plan, it seems like the shrinkage of the investment is stronger than we have expected. And this has become clearer in the past couple of months. Kenji Yasui: And as a follow-up with the first question, the China's top three companies, how much of the Chinese revenue do they make up? ?????: Top three manufacturers are not always top three customers in our business. So they actually change when emerging customers come up and existing customers become bigger. So in each quarter, about 3 top companies make an investment. That's what's happening on the ground. Kenji Yasui: So in 2023, 2024, if you look at the total revenue, and if you look at the top three companies in China, how much do they represent, the top three companies in the total revenue you make in China? ?????: Do we disclose that information. We're going to look into the numbers. And then [indiscernible] is going to check whether we can answer that question. And if yes, we are going to come back to you. Operator: I understand that there are still more people who want to ask questions. But to some constraint, we would like to close this Q&A session now of SCREEN Holding Company Limited. This was the financial results briefing session for institutional investors for the first quarter in the time of March 2025. Thank you again for coming to the meeting despite your busy schedule. Thank you. And I'll ask for your continued support. Thank you.

Chiho Otobe: Hello, everyone. It's time to start the earnings call for the financial year that ended in March 2024 of SCREEN Holdings. Thank you very much for taking the time to attend today. My name is Chiho Otobe, and I'm an Executive Officer and Head of the Corporate Communications Department. Thank you very much again for being here today. The documents for presentation today will be announced on the website, at half past 3 or have been have also already been posted. And we will also post a recording of today's earnings call later on. Please use it for your convenience. This earnings call is also being interpreted into English. So we have an English conference room set up on Teams. We would use English interpretation to have people from other countries and other languages followed with the conference. There are three things in terms of housekeeping that I'd like to mention ahead of the conference. First of all, your cameras and microphones are muted, by the organizer, on Teams. And when it comes to doing Q&A, we will enable your microphone so you can switch it on. This is just a measure of precaution to ensure a smooth progression of the conference. Please also refrain for mentioning specific customers or specific products of competitors or names of competitors, and please understand that we can't make comments on the situation of specific other companies. We will have time for question and answers at the end of the presentation, and we will mention details on that later. So let me briefly introduce, the participants on the side of SCREEN Holdings. First of all, Toshio Hiroe, the Representative Director, President and CEO of SCREEN Holdings. Toshio Hiroe: Thank you very much for taking the time today. Chiho Otobe: Mr. Yoichi Kondo, Representative Director and CFO. Yoichi Kondo: Hello. My name is Kondo. Thank you very much for being here today. Chiho Otobe: Mr. Akihiko Miyagawa, Senior Executive Officer and Head of the Financial Strategy division. Akihiko Miyagawa: Hello everyone, thank you very much for attending. Chiho Otobe: So we would start this by a presentation from Mr. Kondo about the financials of the year that just ended. Mr. Condo, you have the floor. Yoichi Kondo: Thank you very much. I'd like to give you the details of our business results and the forecast for the year that ended in March 2024. We've increased our revenue, operating income, operating profit margin, ordinary income, and net income and we've also exceeded the forecast that we've said in January. We were paying out another ¥140 of dividends at the end of the term, which is ¥448 before split. We've reached record highs for sales and profits, also for operating income and operating margin. For SPE, for GA, both sales and profits increased year-on-year, and we achieved a record higher op margin for FT, sales decreased year-on-year and lost and for PE, both sales and profits decreased year-on-year. Net sales for the full-year were ¥504.9 billion. Operating income, ¥94.1 billion. Operating margin 18.6%, ordinary income 94.2% and net income of ¥70.5 billion. Net sales up 9.6% or ¥44 billion, the OP income up ¥17.7 billion, ordinary income up ¥60.8 billion and net income up ¥13 billion. Sales revenue, operating income, and operating margin are shown here. And these are the results of value up 2023. So we've improved the profitability. We've improved revenue as well. Next page, please. This is the revenue proportion by region. 82.4% overseas, Japan, 17%, China, 12%, and so on. So we see that China has reached a very high level. Next page, please. This is the composition of the group sales by segment. SPE has reached a very high level at 82.7%. Next page, please. These are the results for the fourth quarter. SPE ¥129.6 billion. The operating income, ¥32.5 billion and operating margin 25.1%. GA net sales, ¥11.7 billion, OP income, ¥7 billion and OP margin, ¥6.7 billion. FT net sales ¥10.7 billion, 0.2 operating income and OP margin 2.2%. And PE, net sales is ¥4.1 billion. On the right hand side, you find the numbers for the full-year, SPE, ¥417.6 billion, GA, net sales of ¥47.7 billion, FT net sales of ¥23.2 billion and negative ¥0.4 billion operating income for FT. OP margin minus 1.8% for FT. PE net sales of ¥14.6 billion, OP margin of ¥1.8 billion, OP income ¥1.8 billion and 12.7% margin. This is the year-on-year comparison by segment. For SPE, QoQ both sales and profits increased, sales to foundries increased as well as those to China and North America. And this exceeded our expectations in terms of profitability, because we drove down fixed cost, and some of the evaluation equipment was moved into this period. So operating income was higher than expected. Year-on-year is also an increase for sales and profits. The sales to foundries increased when sales to memory applications declined. It is similar to the QoQ situation. For GA, both sales and profits decreased. The recurring business however remained solid. In terms of year-on-year, both sales and profits increased. POD and other equipment sales as well as recurring business remained solid. And we also handed some help from FX. For FT, both sales and profits increased, and we are profitable for the first time on a back basis since two years. We've returned to profitability on a quarterly basis. Sales decreased year-on-year and managed to reduce loss for business restructuring. For PE, both sales and profits increased and OP margin improved to the 10% range. In terms of year-on-year, both sales and profits decreased and due to the sluggish investment in package substrates. This is the [indiscernible] for our balance sheet. The total assets are ¥676.8 billion and the cash is still quite abandoned. Some of it is included in other current assets, but the figures I see. This is the consolidated cash flow minus 31.0 operating cash flow for the fourth quarter. We've decreased the payment cycle 60 days cash, And so this is just a temporary decrease of financial cash flow and it's going to improve going forward. Financial cash flows and others, I see. This is the analysis of operating income growth, from the ¥76.4 billion in FY 2023, March plus ¥18 billion for sales and capacity utilization, plus ¥13 billion for profitability and minus ¥15 billion for fixed cost plus ¥2 billion for exchange rates taking us to ¥94.1 billion. Increase in sales and capacity utilization is mainly attributable to SPE, and profitability to SPE and FT. Labor costs and R&D is what is being used. Exchange rates mainly impacted GA and PE. This is all the presentation from my side. Thank you very much, Mr. Kondo for the presentation. Mr. Hiroe will now talk about the business environment and the outlook. Mr. Hiroe, our CEO, you have the floor. Toshio Hiroe: Yes, I'd like to say a few words about the business environment and the outlook for the business environment for SPE, the market for semiconductors, for PC, smartphones, and server applications, we see expected growth especially for servers on a monetary basis. The WFE outlook forecasts a growth of investment in China and the dealers also say that the DRAM also, I suppose you could cover it in the second half. Taiwan is going to take a lead in leading edge node investments. So we see a positive outlook here. Power devices investment could become weaker going forward. For GA, in May, there will be the drupa exhibition. And for that some customers have remained their purchases. We are going to announce new products at the drupa and we expect to recover afterwards. For displays, the demand has improved as expected and we're going to turn profitable this period. OLED is increasing gradually this financial year. And for PE, the memory demand, print circuit boards has seen a set of weaker demand, and we expect the recovery in the later half. Yoichi Kondo: So overall focus of the business and for the full-year in comparison with the previous year, we expect increase in sales and the profit. So we would be aiming, so that renewing the record high for the four years in a row for the profit as well as the sales. And the full-year dividend, then would be achieving the record high. That would be ¥224. And this year, sort of by further 2026 and the new midterm business, management plan would be started, which would be explained later. As for the SPE business, so WFE, as I mentioned previously, so calendar year '23 will be minus 5%. That is a landing of the calendar year 2023. And then as for the 2024, the market then would be growing by the mid-single-digit percentage and the foundry logics and the 4D leading edge asset on those investment, this would be accelerated. So this would be accelerated further. As for the memory, so the DRAM investment would be restarted in the latter half of the year. As for the application, sort of investment as for the foundry, so that due to the increase of the demand of the AI application and the mass production would be front loaded. As for the logic, and the installation of the new factories and it would be a progress in accordance with the plan. As for the memory, so related to the AI application in the second half of the year and the DRAM CapEx, so that would be restarted. And then we are expecting the recovery as for the NAND. So gradually, the market will be recovered. As for the image, device and the power devices, so they are relatively slowing down. As for the image item in that investment in China would go up. So as for the power device and we are -- it's a little bit sluggish. As for the Chinese market, so the existing and the emerging foundries and the memory combined, so the investment for the mature application would become active. So on this page, so this is about the -- so that the sales by the application QoQ, so DRAM Flash would increase driven by China. Year-on-year for Q4, so that the foundry made a significant increase and the increase happened in DRAM driven by China as well. And then, so that the ¥129 billion SPE sales was a record high. And in Q4, so that is making a production to the production productivity. So that the three year, year-on-year, so the foundry made a significant increase and for the DRAM, there was an increase and driven by China as well. And posted services and the sales increased. However, relatively, the proportion or share decreased. So at the end of the last year, it was the 18% of that is a share of the post sales service. Next, please. So this is by the focus by region. So QoQ, so that the sales to China will increase and so is the sales to North America. So year-on-year, and the sales to China as well as sales to United States doubled. So that the full-year year-on-year the sales to China more than doubled. And then the sales to North America made a significant sales. So the trend is very similar to the 4Q, year-on-year. So next page is about the sort of focus of the H1 of this year. So as you can see the situation is very similar to the H2 of the last year. So the [indiscernible] is slightly increasing, but the picture is very similar to the picture of the H2 of the previous year. So, this is by region. And again, the dependency on China, Taiwan -- excuse me, as to the dependency in China, would be continued in the H1 this year, and the ratio of the China goes up, and then the ratio of Taiwan goes up. So this is our expectation. So this tendency, so that would be the same in comparison between the H2 and the H1 of the previous year and this year. As for the GA, I mentioned about the drupa, so in the ink business, so the recurring business has been starting up, and this is going to be stabilized. And for the full-year, OP margin would be the same as the last year. This is our target. As for the FT, so display demand made a turnaround as we expected, so that the order of the audit will be gradually increasing, but sales is mainly coming from the LCD for this year. So for the full-year, we expect a return to profitability. As for the PE, so the investment in package would be recovered in the second half of the year and the post-sales service is solid and the OP margin of the 10% would be maintained. Next, please. So this is about the forecast of the business on the H1. So our overall H1, so the ¥276 billion and ¥48 billion operating income and 17.4% is the margin. And the second half was ¥52 billion 18.3%/. For the full-year, ¥560 billion of the sales and operating increased at ¥100 billion this is the first time for us. And the margin is the 17.9%, and then current ordinary profit is ¥100 billion and the net income is at ¥72 billion. By segment, SPE is driving. So that is the ¥460 billion of net sales, and the operating income is ¥106 billion at 23%. And the GA is in a ¥48.3 billion and the 6.3% of the margin. And the FT ¥36 billion of the sales and the profit would be happening with ¥1 billion at a 2.9 percentage. And the PE net sales would be ¥15 billion and the 2% of the OP income and 13.3 percentage. And the others, net sales would be 3 percentage and a minus and the ¥12 billion this is the adjustment of the growth investment. As for the CapEx, some of the CapEx have been already completed, and the R&D will be ¥27 billion and the CapEx it would be ¥39.8 billion, and then depreciation would be ¥10.8 billion. And then January, our forecast as for the CapEx. So we explained this would be ¥30 billion, but that is increased by the ¥9.8 billion as you can see at the commentary at the bottom. So this is due to the acquisition of the building and the land in order to expand the capacity of the production of SPE. So in anticipation of the next midterm business plan starting in the March of the 2028, we made a strategic investment. And this year, so this fiscal year R&D at ¥33 billion and CapEx is ¥30 billion, and then depreciation would be ¥13 billion. So the R&D is coming from the SPE strategic investment as well as the investment in the new business this is our plan. As for the CapEx, so the centering around the SPE, so that we will -- so they establish the facilities and for the R&D and then as well as the manufacturing, and then we will build a new buildings for the SPE. So this is in for the CapEx plan. So FY 2024/03 as well as the forecast of the 2025/03. Sales and capacity utilization, there would be a plus of the ¥28 billion and the profitability improvement is ¥1 billion. And then fixed cost then would be going up at the minus ¥22 billion. And exchange of the exchange rate is minus ¥1 billion. And then overall end, would it be ¥100 billion as for the sales as well as the capacity utilization increase is driven by the SPE. Improvement of the profitability is coming from the SPE and the FT as well as the increase of the fixed assets, this is due to the growth investment in the SPE. And then as the GA and PE are influenced by the exchange rate. So as for the dividend, so that the FY 2024/03, we will be renewing the record high. As Mr. Kondo has already explained, I will be skipping the explanation. So the FY 2025 March is our focus, then we'll be renewing the record high. So the ¥224 was already explained. So then the before and the converting it into the spirit, this is going to be the ¥448 it is kind of going to be increasing the record high by ¥1. So later, I would be explaining. So and then 30% of the payout ratio has been the policy. And then, so that, we are -- so that the continuing this policy of the 30% or above of the payout ratio. So next is the value up further 2026, and the outline would be explained. Please go. Toshio Hiroe: First of all, let's look at the highlights of value up between '23. In July 2022, we revised the targets, but we've achieved all the new targets. And I'm not going to read out all the figures, but you can see for yourselves. And looking at it by segment the values by segment, SPE, far exceeds the original target. For GA and PE, we have still reached the target. FT had the issue that the display industry saw lower investment, so it's under the target. However, we see a recovery or we are targeting recovery within this period, the current running period, and the new MTP. Let's take a look at the economic value outcome. We have three basic strategies. One of us creating innovation, and increasing corporate value through a same cycle, and we've wrote this out within the company and innovation management was introduced, we've set the topics and we've revised the R&D strategy. So we've ingrained this in the company culture. And for the existing markets, increasing the market share and working on the new scale of new businesses. It's still lagging behind in terms of the results, so this is the challenges that we see. We are going to continue investing in this part. On the bottom, generating cash flows equivalent to profits by improving both profitability and efficiency. This is a target that we've worked on. We've introduced ROIC management, and it has penetrated the company. We have a ROIC hurdle rates for our portfolio management which is the X axis, and the Y axis is the revenue growth rate. So we see how the different business are performing. And we've established this new framework, and it has taken root of the company. We've also, leveraged S-Cube 3 and S-Cube 4 investments. S-Cube 3 is now fully operational, and it helps us to improve profitability. We've also restructured underperforming businesses, and currently, most of the businesses are turning a profit in the last year of the plan. We've also shifted the focus to cash flow management based on ROIC. And this new structure has also been rolled out over the company and is taken up. On the next page, we talk about the social value. I'm not going to go into the details, but you can see this at your convenience. And let's look at the major markets during the next midterm plan. This is the prerequisite for our plans, and this will of course have an impact on our own results. For WFE, the compound annual growth rate is expected to be 5.8%. For GA, the digital printing market is expected to exhibit a growth rate of 3.3% annually. FT is somewhat difficult, 2023 had little investment. So we hopefully can jump on the recovery in '24 or '25. CAGR is 21%. In '26, we expect to see a normalization for, PA print circuit boards. The annual growth rate compound growth rate is 0.6%, as of the forecast. So we want to leverage our market share and new products to expand new markets. As for our basic initiatives or main initiatives in the next MTP, the current value up 2023, where we've stabilized our financial foundation, this will be the springboard to go to 1 trillion revenue, and this is the growth path for this. For business growth, as I've said, we've introduced portfolio management, and we are going to do this byproduct, portfolio management byproduct on a product basis, and also broaden our ROIC management approach. For business growth, we'd like to increase our presence in the industry and show new value to the customer with our technological capabilities. So we need products that can make this appeal and also help us increase our market share. That's our goal to receive this innovation and to increase market share by that. In terms of innovation management, it says new technologies, new products on the market. Of course, putting new technologies, new products on the market is important for us. We are also going to use our new developments and technologies for our existing businesses as well, and the results will be creating new businesses worth ¥10 billion in terms of sales. In terms of the intellectual property, we want to use it with the technology strategy and the R&D strategy. On the right hand side, you see the business foundation. Our approach to human resources in terms of strategy is to create vibrant corporate culture and make people feel more rewarded. These kinds of measures are going to make the whole company more vibrant. And so the key element here is to be a solution creator. For our financial strategy, we want to build a risk resilient, financial standing that that supports our endeavors in the business growth. For digital strategy, information security has been an important topic in recent years and months, and we're going to work on this as well as DX to drive productivity. In terms of the facility strategy, it's about developing facilities that support our business growth and also that supports R&D. This time, we also have a common strategy, which is the sustainability strategy and the plan strategy, which are centered here at the middle of the page. The products that we provide and the services that we provide with our businesses have to make contribution to stability, by their performance, and they have to drive our brands, our solutions. So these two things are also contributions to business growth and they are also part of the business growth and business foundation. This talks about the financial targets. On a cumulative basis, we have introduced the targets of [indiscernible] trillion or more in terms of revenue over three years. And an average OP margin of 19% or above, ROIC, 15% above and the shareholder return policy is more than 30% dividend payout ratio, and also a flexible share buybacks based on how progress investment in growth plays out. The left hand side is a four term program. So that's something you have to keep in mind doing the comparison. This is for each individual segment. Regarding SPE, it's ¥1.5 trillion over a term of three years, ¥1.5 trillion, average OP margin 23% to 25%. This is the range that we are aiming for. And for GA, we are aiming for ¥150 billion or more in sales committed, average OP margin of 6% to 9%. For FT, we are targeting the committed sales of a ¥100 billion or more and average OP margin of 3% to 5%. For PE, a cumulative sales of ¥50 billion or more and an average OP margin between 12% and 15%. This committed approach is based on the fact that in the mid and long-term, we have certain growth stages. Value up further [indiscernible] is where we see this as the first step, and then to extend it to the next return plan. So I hope, I can benefit from your understanding regarding this. Yoichi Kondo: So those are the non-financial targets. If you have a time, please look at those and the targets. So engagement survey, would it be started this year, and the score of the 70% or higher, would it be our target as the KPI for the engagement score of the employees. So next page, please. So on this page, so that you can see the cash allocation. So the previous midterm year for the full year cumulatively, so the investment fund was ¥406.3 billion and this is a combination of the R&D and the CapEx. And then we can answer that ¥90 billion and ¥97.3 billion for the R&D and the CapEx of ¥90 billion for the growth investment. And we paid out the ¥56.8 billion and then expecting for the advance increase of ¥126.4 billion. We returned debt by ¥31.3 billion, so this is a cash allocation over the past four years. On the right hand side, you can see the current, the sort of midterm plan. So combining the R&D and the CapEx and the strategic, so that strategy, I said that we have a ¥360 billion, R&D would be allocated ¥110 billion and the CapEx and the ¥100 billion and the strategic investment would be ¥80 billion. So which includes an M&A in order to grow our business. And the dividend, would it be ¥70 billion. But depending upon the progress of the growth investment, flexibility, we will contact the share buyback. So I'd like to ask for your kind of understanding. So next page, please. So the Value Up Further 2026. So this is a business growth and a strategy as for the SPE. And so that we try to increase the market share of the cleaning equipments. And then we want to provide the [indiscernible] and we want to expand the R&D capacities as well as an acquisition of the new BOR. And then we have to enhance the production capacity. So that we have to enhance the production engineering and in order to reduce the lead time. And so that we drag to, so that enhance the production capacity and the efficiency will be going up, suppressing the investment, but we'd like to expand the production capacity. As for the reinforcement of the business foundation, so that with the DX utilization, we want to make our business efficient and we have to acquire top talent. So those are the themes of the reinforcement of the business focus. As for the GA, so the POD equipment sales should be expanded and we have to expand the recurring business and the package splitting business has to be established. As here, so that now, so that the soft packaging initiative will be reinforced, and we are launching a label printing. So combining that, so we try to implement those initiatives for the GA. As for the FT display business, profitability has to be improved. At the same time, so the new coating technology and the new application of the coating application should be expanded. Road-to-road product technology needs to be expanded. As well as the internal OEM business, needs to be expanded. That advanced package as well as the hydrogen related products that would be the target of the internal OEM business. As for PE, so that the direct patterning equipments, so in this area, we try to enhance the presence in the industry so that we are working on the direct patterning for the sort of the register. There is an ongoing initiative. That we'd like to go to the circuit pattern register direct patterning and that we have to enhance the application of the direct patterning. As for the new business, sort of the ¥110 billion or further, advanced package and the hydrogen they are promising. As for the life science, sort of over the past three years, and we are still in the next three years, we would be still in the after that investment phase as I would be skipping the details. So if you have a question, please ask a question later on. As for the group news and the topics, so that I would be skipping the explanation of the group news and the address to go into the question and the answers. So if you have a question about the related topics, then please do ask questions. As I mentioned at the beginning, so this midterm business plan, so that would be the transition to the next midterm business plan, and that we would be in the strategic investment phase as we would be taking, implementing necessary initiatives. So I'd like to ask for your kind understanding and cooperation. Thank you very much. So Mr. Hiroe, thank you very much. Operator: We're now going to move on to Q&A. [Operator Instructions]. So I'd like to start with Shibano from Citigroup. Masahiro Shibano: Thank you very much for the explanation. My name is Shibano from Citigroup Securities. I have two questions. The first question is about the tendencies for the Chinese market. In January at the earnings call, you said that in the next year, the forecast was pretty solid for 2025, so how does it look now three year -- three months onward? What kind of momentum do you expect for the current and next financial year and what would be the color for the market? Yoichi Kondo: Yes. So right now, you would see our first half revenue expectation, China's proportion is 49% so it's even higher than in the second half. It might go a little bit downward in the second half of FY '25. But we largely receive many inquiries from Chinese customers and demand from Chinese customers is going to make a significant contribution and continue to do so in the current financial year. Thank you very much. Masahiro Shibano: About the MTP targets, you are doing the MTP over three years. Maybe I shouldn't ask this kind of question. The ¥1.8 billion and 19%, it looks like OP should be 340. And then you say a 100, and so on, ¥100 billion. I think it does makes sense. It doesn't seem to be much off, but do you think, there's something that you can achieve even beyond that, and what would be the drivers? For example, simply put, would it be just WFE expansion or profitability, high profitability in SPE or share gains? What would be the main contributors, the manufacturers that came into play here? Yoichi Kondo: Well, in terms of revenue, digital segments, the SPE would be the driving segment here. And I mentioned that for the WFE, the CHER is 5.3%. So we've calculated on that basis, but there might be a little bit more margin, depending on how initiatives play out. And we've added that basically. For OP margin, it was a little bit above 23% in the last financial year, so we see that as the starting point and based on this we're going to take you to 25%. That's our outlook or our aim. Thank you very much. Operator: Yes, thank you very much. Takashi Shimamoto: I'm Shimamoto from the Okasan Security. So the WFE outlook is my question. So from the previous year, so that the figures has been little bit changed. So your comments are changed as well. So that, what are the -- so that the previous, so that the forecast was lower, so that the single digit percentage. So what made, so that this kind of change this time? So in the previous forecast so that the calendar year '23 sort of would be going down further. But the answer, at the end of that, day, so that this slowing down with the reduction that the market was not so bad. So that is the reason for the division of the forecast. So that the single-digit, mid-single-digit is our expectations, but so that the immediately, so that this would be 4%. So this is reflected by the result of the 2023. That is the reason for the change of the outlook of the WFE. So the minus 10% was the previous, sort of forecast, but the minus and a 5% was the current situation. That is why, that how about the comment of the power device -- power device? So there is a change, and the foundry was a little stronger than expected. So that, how do you see the changes in the each of the segments? Toshio Hiroe: But as for the power devices, so I think I'm going to say in the adjustment interface so that the my impression, so that has not been changed since the last three month as for the foundry so that the investment was front loaded. So by the [indiscernible] three month and this is a new topic for the foundry so that they are combined, so that some are better, some are worse. But the current, momentum strength so that this over order, so the tone is the same. Yes. As sort of my direct feeling has not been changed so much. There is a swapping of the factors among the business segments. That's all, but the overall tone is the same. Takashi Shimamoto: The second question, as for the midterm business plan, SPE capacity is my question. So rather, sort of next three years, what would be the increase of the capacity of the production of the SPE? What is your target? So that you have a plan to construct the new factories. Toshio Hiroe: So S-Cube 5, so the investment has been completed so that we have to make it a 100% in full operation. So that the ¥500 million and ¥1 billion of the consolidated sales would be possible. So that, with this initiative, so that the production engineering technology would be enhanced and the capacity would go up. But it's a little bit too early for me to mention, but during this business plan of the three years, so the productivity would be our main, initiative, and then production engineering capability and the automatization would be enhanced. And then we try to increase our production capacity by the 10% or 20%. So this is my target. Takashi Shimamoto: So let me confirm. S-Cube 6, so do you have a plan of the S-Cube 6. So that, this is going to be incorporated into this mid sort of business plan. So is it the case or that you are not able to make a comment about the S-Cube 6s? Toshio Hiroe: So I think this is a very dedicated question. So as for S-Cube 6, the SPE capacity, so that this wouldn't have been making for contribution to the capacity of the SPE. So FT and the hydrogen would be the target of the S-Cube 6. So engineering a space. So that would be, so that the purpose of the S-Cube 6s but that doesn't make a contribution to the capacity enhancement of the SPE so that the accrued oil facility as sort of production, so that that needs to be improved. By doing so, we'd like to increase the capacity. Takashi Shimamoto: So thank you very much. I understand. That is all, thank you. Operator: Thank you very much, Shimamoto. Let's move on to Yoshioka from Nomura Securities. Atsushi Yoshioka: Hello. Can you hear me? Operator: Yes. I can. Atsushi Yoshioka: Thank you very much for giving this presentation. I have two questions. The first one is about the MTP, the market approach on Page 33. You say the WFE market. You say what the premises are, and this is just the WFE numbers. So what about the total addressable market for cleaning equipment? Is there a difference, in terms of the way you see the markets? You said before that the term for cleaning would go up higher or more quickly than WFE. What kind of premises have you been taking? Toshio Hiroe: Yes. As you said, the annual growth rate, WFE is one of the basis that we look at and we expect an increase of the term for cleaning and the opportunities of cleaning for advanced packaging areas that we can capture. So in terms of that part, for us it would be something that we would try to capture properly. And -- but this is included in the things that we've talked about. Atsushi Yoshioka: Do you have any specifics on that? What are the specific figures look like for the term of cleaning and so on? Toshio Hiroe: Nothing to disclose at this point unfortunately, but maybe during the Investor Relations Day or from SBE, there might be some details on that. Atsushi Yoshioka: As a follow-up to that, for the cleaning equipment, the market share you mentioned share increase in the medium term plan. Currently, what is for 2023, 2024? What's the trends been like, and what kind of share increase opportunities do you see in the future? Toshio Hiroe: About the market share let me say this. Gartner publishes that, and according to that, as of May, late May, we will end the analysis and make an announcement. I think that's more suitable. Currently, mostly 2022, '23 the market share hasn't changed a lot in these years for asset screen. However, in terms of what we have now, what we see, we see an increase in market share, the way we understand it, but we also have the weak land yen playing a role. And the Gartner is being calculated in dollars. So we might be discounted for that in the Gartner evaluation, but there will be an official announcement at the end of May. Atsushi Yoshioka: I see. Thank you very much. And then I'm going to the second question. Currently, 23% SPE OP margin is where you came in. In the end of March 2025, you see it being stable, more stable flat maybe because of the evaluation equipment. But maybe -- do you see any productivity increases for S-Cube 5? So why, would the OP margin look the way you forecast it to be in the year end of March 2025? Toshio Hiroe: For the end of March 2025, the development costs is included in our strategic investments that we have to make, and this goes for challenge for people, and these strategic investments have to be made early on in order to really be able to communicate our added value to the customer. So in that sense, the 23% is what we have disclosed now, but we'd like to use this as a starting point for next period and the one beyond to make further improvements. But this is where we see it standing right now. Atsushi Yoshioka: I see. Thank you very much. Operator: Thank you very much. So thank you very much, Mr. Yoshioka. So next, let's go to so [indiscernible] from the Morgan Stanley. So please unmute yourself. Unidentified Analyst: So thank you very much for the opportunity. Thank you. So my first question is about the prospect of the China. So there are two approaches so that the United States is in a tightening the so that the restriction. So maybe your sales would be affected because of that. This is one way of the -- so that our thinking. There are some cancellation increasing so that you might be affected by the cancellation. So that what is your view about the trend in China, going forward? Toshio Hiroe: So as for the China, restriction regulation, in July, so there is the restriction. We have to follow the restriction, in order to conduct the trade. And then going forward, very difficult to make the comments. We are not sort of in the position to make a comment so that we want to keep on watching the sort of ongoing trend. And we have to follow the restriction and the regulation in order to do the trading with China. So the other point is about the cancellation. This is another question. So that the timing of the increase of the -- so that the order is that the way we start the production after the activity date is fixed. So this is the timing. So in that process, so the cancellation, no cancellation happened in that process. So that you want to, it is depending upon the how to increase the so that the order received. Unidentified Analyst: Thank you very much. My second question goes about the operating profit margin. As I've been talking about your capability and the position. And then I think I know you are not ambitious enough so that the 25% of the OP margin was achieved over the previous year and that you have a greater technology as well as the -- so that you are going to make on the investment of the strategy. I hope that you will be aiming for the -- so the 30% of the OP margin. So we expected to hear very positive and ambitious target of the OP margin. But what is the reason you are not that sort of ambitious about your OP margin projection? Yoichi Kondo: So I am not satisfied with the current projection of the OP margin, but through the strategic investment. So that next sort of stage, we try to target at the higher growth. Of course, so that, we want to compete against the competitor and we want to deliver the added values more than the competitors. So this, would it be, proceeded strategically. So this is our activities, in the coming three years of this midterm management firm. Unidentified Analyst: So additional question. So that means so that -- what is the sort of vision, so that your vision in the operating profit personally? Yoichi Kondo: I hope this should be 30% or higher. I have no comment. Sorry about that. Unidentified Analyst: So I understand. Thank you very much. Operator: Thank you. And thank you very much for the questions. We'd now like to move on to Mr. Yoshida from CLSA Securities. Please unmute yourself. Yu Yoshida: Hello. My name is Yoshida from CLSA. On pages 19 and 20, you show the breakdowns of sales for SPE. I understand that use how to put this downturn for China and what about the region breakdown for the second half? And maybe for the calendar year '25 or for the next period. What are the directions per application on an application basis? Yoichi Kondo: Well, for the first half, the orders will be what decides our revenue in the second half. So it all depends on the kinds of orders that come in now. As I've said, we have the feeling that China is still very strong, going very strong. Maybe less intense, but DRAM and other investment is also picking up again. So, overall, maybe the breakdown might be different, but order volumes, should be the same kind of strength, same kind of volume in the second and -- in the first half and second half. So the revenue itself should be on the same kind of scale that continues. Yu Yoshida: Let me just ask. So for China, it would be the same in both halves, but then we will talk about DRAM and Foundry. This gives the impression that that's a 240 for both halves. It looks like, there should be more other investments in the first half and more revenue and China should account for lower parts. So is that something that's not definite yet, or haven't you included it? Toshio Hiroe: Well, as you've pointed out, the orders are now coming in, and the first and second quarter, depending on the orders we see there, we'd like to update our views. Yu Yoshida: I see. The second question you have a framework of ¥80 billion for strategic investment. What kinds of investments are you interested in when it comes to M&A and what about the shareholders return? You mentioned 30% dividend payout ratio, you're also saying that you are flexibly on buybacks depending on the investment. If you don't find specific investments, M&A opportunities for ¥80 billion. Are you going to allocate that to shareholder returns? Toshio Hiroe: We haven't made that disclosure yet, but in our grant design, we are saying these are the growth areas that we identify. So these would be the main focus areas that we search for opportunities in. Of course, the existing business areas will also be candidates. I hope you understand that. And furthermore, about share buybacks, the image or the rough idea that you expressed, I think hits the point, and Mr. Kondo will speak about this. Yoichi Kondo: Yes. This is the implication that we intend. Yu Yoshida: Right. Regarding M&A, are you targeting SPE as a segment, or is it just the new businesses, including SPE? How should I think about that? What kinds of areas, if you can speak more broadly, including SPE? Toshio Hiroe: As the areas that we think about digital transformation and also mobility are areas that we focus on life science, or shall I say [indiscernible] again -- sorry. Four areas, four strategic areas that we are aware of or that we focus on in terms of the opportunities. Yu Yoshida: Thank you very much. That's all from my side. Operator: So thank you very much, Mr. Yoshida. So next question, would you go into the question from the internet conference room. So the conference room will be changed. So please, give me some time. So please wait for the moment. So, Adrian San, please ask your question. Yes. It looks like, there is a technical difficulty of the unmuting, so I try to go to the next person first. So please wait for a moment. The Adrian San is speaking something. Please wait. Okay. Let's go to Mr. Nakamura from the Goldman Sachs. Due to the time limit, and Nakamura San's question will be the last question for today. Shuhei Nakamura: Yes. Thank you very much for this opportunity. So due to the time limit, I try to ask the question very briefly. So fixed cost, so that this would be increased by the ¥250 billion [ph]. What is the breakdown? So after the FY '26, what is your view of the allocation of the fixed assets? So that the ¥100 billion would be spent and for the strategic, so that's the management and the SPE, so that investment would not be so large. But then what would it be, so that your breakdown of the strategic investment in the next three years. So ROIC of the 15% or higher at 15.9% was the previous and full-year. There would be the decrease down to this next three year. But, if -- so when is the timing to enhance the stage of the ROIC? So this is my question. Toshio Hiroe: So as for the sort of fixed assets, Mr. Miyagawa will answer your question. So Miyagawa is speaking, so I try to answer your question. So FY '25 and the fixed cost increase what is the reason for that? So SPE is the main reason. And then when it comes to the breakdown or the contents so that the capacity of the production is one of the reason because we have to hire more people and the labor cost will go up and the S-Cube 3 and S-Cube 4 and S-Cube 5 depreciation will go up. And then as a competitive new product development, that is needed -- that is why we want to allocate more money for the R&D. So those are the factors of increase of the fixed cost. Akihiko Miyagawa: So thank you very much. So during the midterm, sort of management plan and the strategic and the growth, sort of investment, I'd like to talk about my image. So the first of all, SPE, so that the [indiscernible] is happening in the entire industry as for the package. And so that, there is a movement in the package. So R&D capability has to be revisited by screen. So and together with the SPE business units so that we are developing the development strategy. And we are reviewing our position and our direction. So that the CapEx as well as the R&D, we try to allocate more money. So this is the main reason for the increase of the fixed cost. And the CapEx or the equipment, and so that for the R&D equipments and the facility would be needed. So please understand this. Of course, and we have other sort of team target, so that which requires some cash allocation, but the main target is allocation of the facility of the R&D. Toshio Hiroe: Yes. Thank you very much. I want to make another one more comment. In the area, so that we don't have the -- so that we are really full. We don't have the -- any, so that the available, so that the area. And we have to look for the other, so that the lands other than Hikone. So this is our plan in the future. Shuhei Nakamura: So thank you very much. Toshio Hiroe: So thank you very much, Mr. Nakamura. So you might have more questions, but due to the time limit, I try to close the meeting. We are a little bit behind the schedule. I'm so sorry for that. But with this, so we'd like to close the 2024 March full-year financial briefing meeting would be finished and for the screen forwardings. Thank you very much for your attendance. Chiho Otobe: Thank you very much for your kind participation. Please support our company in the future. Thank you.