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Unknown Executive: Thank you very much. So today, it will be a long session. Thank you very much for your kind understanding. So first of all, I will explain Shiseido's current and future prospects. So first of all, our current position regarding the sales momentum, which is the most important factor for our company, I believe we have emerged from the tunnel. For a long period of time, our growth rate fluctuated significantly from quarter-to-quarter amid a worsening macroeconomic environment in China, shrinking travel retail market and a sharp decline in Drunk Elephant sales. After a prolonged reset, we finally achieved a positive return in Q3. I believe we have established the foundation for Shiseido to return to a growth trajectory. We have prioritized speed in our structural reforms and have been implementing them with determination as reforms to shape Shiseido's future. With implementation of voluntary retirement program at our global headquarters announced at 3:30 p.m. today, the major initiatives planned by the Global Transformation Committee have been completed. As planned, all actions will be completed by the end of 2025, and we are on track to realize JPY 25 billion in benefits in 2026. Regarding profitability, thanks to the benefit of structural reforms and strengthened financial discipline, cumulative core operating profit for the third quarter exceeded JPY 30 billion, bringing us closer to achieve our initial target of JPY 36.5 billion. Furthermore, strengthened investment discipline also contributed and free cash flow is expected to exceed our initial forecast. We have recorded a noncash goodwill impairment loss for our Americas business. Hence, we make a downturn revision of our operating profit and net profit forecast for 2025. We take seriously the harsh reality of net loss. And for this reason, we will vigorously promote growth and improve profitability in the Americas region going forward. The difficult restructuring period up to now has been a process of building a foundation for a new growth trajectory. We will now once again set course for robust growth. As you can see, momentum for FOCUS brand improved significantly in Q3. In the first half, we are significantly impacted by the significant decline in Drunk Elephant revenue and the shrinking travel retail market. However, these factors generally subsided in Q3 and strong innovation and new product performance also contributed finally turn around as a company-wide positive result. Starting here, we will drive growth. Next, action plans. The goal is to become a company that can continue to invest in people, brands and innovation. To achieve this, we first need to build a solid foundation that can generate the necessary capital for reinvestment. Hence, we have promoted structural reform in each region, starting with our Japan business last year. We have also decided to implement a voluntary early retirement program, the next career support plan as a global headquarters. This will affect approximately 200 people, and we plan to record a structural reform cost of approximately JPY 3 billion in the first fourth quarter. We will also reorganize our group companies and R&D organization. By optimizing the group as a whole, we will focus resources on maximizing brand value and accelerating sales. Our Americas business will steadily advance our growth and profitability improvement. Thanks to the structural reform and fixed cost reduction implemented this year, we are on track to achieve profitability in 2026. Furthermore, Alberto Noe, who has led our Americas business as Interim CEO since April this year, will officially assume the role of CEO from the Americas in -- for the Americas in January 2026. Having led fundamental cost improvements while building a strong transformation-minded team, Alberto will continue to demonstrate leadership across Europe and U.S. We have attractive brand portfolio in the Americas. Drunk Elephant will be in the next page. NARS is our largest brand in the Americas. In 2026, we plan to launch the brand's largest new product lineup to accelerate growth. Fragrances also have big potential. The introduction of Max Mara has received extremely positive feedback from retailers and other fragrance brands primarily offered in Europe will also drive growth in the U.S. Dr. Dennis Gross has successfully completed its PMI, and we will leverage its strong partnership with Sephora, the largest retailer to achieve robust growth. Brand Shiseido is the second largest brand in Europe's major skin care market with vital perfection boosting a strong presence in the anti-aging category. Going forward, we will maximize our knowledge gained in Europe to further leverage our growth in the U.S. Drunk Elephant is scheduled to have a full-scale brand repositioning next year. This year, we have been steadily reducing channel inventory and optimizing costs. Inventory levels still vary by region and by retailer, and we are in the process of optimizing overall inventory. We will continue to closely monitor the situation in the fourth quarter, which is also marks the holiday season. The 4 pillars listed here will be our future strategy. We are already discussed -- in discussions with major retailers regarding our brand reset campaign with a very positive response. Our project team jointly formed by our global headquarters and Americas will closely monitor the situation and ensure solid results. Next, I will explain our outlook and Q3 financial results. First, forecast. Following the recording of the impairment losses in our Americas business, we make a downward revision of operating profit, profit before taxes and net profit. Regarding net sales, we are also revising our underlying growth to minus 1%, reflecting the downward risk we announced in August. Meanwhile, we will maintain our core operating profit target of JPY 36.5 billion through our risk-adjusted cost management and company-wide cost review. We also continue to strengthen our investment discipline, improving our working capital and carefully reviewing capital expenditure. As a result, we expect free cash flow to reach JPY 35 billion, JPY 20 billion higher than the initial expectation. We will maintain the annual dividend at JPY 40 per share. Due to the impairment loss recorded in the Americas, we plan to record appraisal loss on shares on the U.S. subsidiary on a consolidated financial statement for Q4. However, that will not affect the consolidated earnings.
Unknown Executive: Next on Page 9 is a summary for Q3. Cumulative net sales for the first 9 months of fiscal year 2025 was JPY 693.8 billion, a decline of 3% like-for-like. This was mainly due to lower sales in China and Travel Retail and Drunk Elephant. Core operating profit was JPY 30.1 billion, an increase of JPY 2.7 billion, primarily driven by stronger company-wide cost management and the positive effects of structural reforms. Nonrecurring items totaled to JPY 63.4 billion, mainly due to goodwill impairment losses in the Americas business and structural reform expenses. As a result, the company posted a net loss of JPY 44 billion for the quarter, while free cash flow was JPY 31.6 billion. Next, on Page 10, I will explain the details of core operating profit. The COGS ratio was 23.2%, roughly in line with the previous year. While the improvement in brand and SKU mix continued, the lower production volume of Drunk Elephant led to a slight increase in the COGS ratio in the third quarter compared to the first half. The marketing investment ratio rose by 0.9 percentage points to 28.4%, reflecting our continued investment in priority brands under our selection and concentration strategy. Personnel expenses decreased by JPY 13.2 billion year-on-year, improving the ratio by 0.9 points. This was driven by cost reductions in Japan and China Travel Retail as well as the impact of the structural reforms implemented in the Americas in July. In addition, since last year's bonus assumptions were set at a lower level due to weak performance, personnel expenses would have decreased by over JPY 20 billion on a comparable bonus basis. Other expenses declined by JPY 8.7 billion, reflecting the positive effects of structural reforms in the Americas and company-wide cost management initiatives. As a result, while maintaining marketing investments at the same level as before, the company achieved improved profitability despite lower sales, steadily progressing toward a healthier and more balanced P&L structure. Next on Page 11 is the trend of the net sales by region. After recording negative growth through the second quarter, sales turned positive in the third quarter, showing a 4% increase. China and Travel Retail grew by 8%, partly supported by advanced shipments ahead of the Double 11 shopping event. EMEA also showed strong performance, rising 22% year-on-year. While this includes the impact of a low comparison base in the third quarter of last year due to the FOCUS system implementation, even excluding this effect, the region achieved double-digit growth. Next, on Page 12, I will explain the performance by region. In Japan, although inbound demand, particularly in the department store channel remained challenging, innovation drove growth and local core brands continue to perform steadily. To highlight here is the success of new products from our focus brands. The renewed Shiseido Ultimune launched in the first half continued to perform strongly, while the newly launched Clé de Peau Beauté care lotions and emulsions in July. And ELIXIR lotions and emulsions in August, both had very strong starts. Another to highlight is the growth in e-commerce sales, which rose by mid-20% in the third quarter, accelerating further from the first half. This growth was driven by increased purchases from loyal users on our direct online platform as well as the success of strategic investments into the EC exclusive channels. As a result, core operating profit increased by JPY 11.7 billion. Despite differences in bonus assumptions from the previous year, cost reductions through early retirement programs and greater marketing efficiency from structural reforms contributed to maintaining a healthy profit margin in the low teens. Next, on Page 13, I will explain the China and Travel Retail businesses. In the China Prestige market, e-commerce continued to perform strongly, while offline channels also showed signs of recovery, indicating an improvement trend overall. For the consumer purchase in China, sales grew in the low single digit in the third quarter. However, looking only at the Mainland China, growth was in the high single digits, driven particularly by strong and sustained momentum in Clé de Peau Beauté and NARS, both continuing their robust performance from the first half. ELIXIR and IPSA both recovered to growth, contributing to the overall sales. Also on shipment basis, Q3 realized a strong double-digit growth in Mainland China. In the travel retail market, the environment remains challenging, affected by weaker spending among Chinese travelers and intensified price competition from discount promotions. Our consumer purchases decreased by high teens percentage. Net sales turned positive, partly due to the low comparison base from last year's sharp decline. We continue to carefully monitor and manage inventory levels to prevent excessive stock buildup at retailers. Meanwhile, the share of travelers in overall sales is steadily increasing, and we will continue to shift toward a traveler-focused business model. Despite lower sales and less favorable business mix in the first 9 months, core operating profit reached JPY 46.7 billion with an operating margin of 19.3%, maintaining a high level of profitability through fixed cost reductions and cost management resulting from structural reforms. Next, on Page 14, I will explain the Americas business. Consumer purchases, excluding Drunk Elephant, turned positive. Strong sales of new products such as the renewed Shiseido Ultimune, along with significant growth of Clé de Peau Beauté, particularly in the base makeup category, contributed to this recovery. On the cost side, the structural reforms implemented in July have started to deliver tangible results. Core operating profit decreased by JPY 4 billion on a cumulative basis. While the effects of structural reforms contributed positively, profitability was impacted by lower sales, tariff-related costs and a higher COGS due to increased inventory write-downs associated with Drunk Elephant's weak performance. Next, on Page 15, I will explain the Asia Pacific and EMEA business. Starting with Asia Pacific, although the overall market, particularly in Taiwan, showed signs of contraction, we continue to expand our market share across the region. Major new product launches such as Clé de Peau Beauté's key Radiant care lotions and emulsions and NARS The Multiple made strong contributions to growth. Turning to EMEA. Sales increased significantly. Fragrance drove the expansion with Zadig & Voltaire up over 70% in Q3 and both narciso rodriguez and ISSEY MIYAKE maintained their double-digit growth. Core operating profit increased by JPY 200 million as higher sales were offset by increased marketing investment. While the first half recorded a loss due to upfront investments in priority brands, the business returned to profitability in the third quarter.
Unknown Executive: Next, on Page 16, the progress on the global cost structure transformation. Cumulative cost reduction for Q3 2025 totaled JPY 21 billion as planned. While we are achieving approximately JPY 7 billion in cost reductions every quarter, the benefit of reduced labor cost due to early retirement program in Japan will end in Q4. So we are expecting a full year reduction of over JPY 25 billion. Furthermore, as CEO, Fujiwara mentioned earlier, the implementation of the voluntary retirement program at our global headquarters will mark the completion of key actions toward achieving the JPY 25 billion cost saving for 2026. From here, I would like to explain the new midterm strategy. After the large-scale structural reforms under our action plans, we will now set our course for a new growth trajectory by maximizing brand value. We have heard many people point out that Shiseido has a strong brand and technological capabilities, yet is in content with the low growth and low profitability. Our goal is in this midterm strategy is to change these situations and demonstrate that our true strength lie beyond this. Especially now in a rapidly changing world, consumers face a variety of changes in today's rapidly changing society amid an unstable world, extended human lifespan and accelerating pace of digitization, feeling of vision and isolation are also increasing. That is why we believe Shiseido has a significant role to play. We see current era as a great opportunity to create essential new value in beauty and contribute to society as a company that is close to consumers. That is why we set our vision for 2030 as by connecting with people, we pursue, create and share new beauty, enriching everyone's lives. Now more than ever, we want to be a company that explores, discovers and delivers new beauty in moving forms of people -- forms for people without being influenced by the times. That is our unique strength and our path to a social growth. We believe that this path will lead to the realization of our mission, beauty innovation for a better world. We are once again adopting in every moment, in every life beauty as our slogan once again to embody this vision. This phrase were launched in 2005. This express our hope that the people Shiseido interacts with that we ourselves will be beautiful every moment and every life. In today's society, these words resonate with even deeper meaning. We hope that each and every person will find beauty in every moment in their lifetime, and we work to achieve that goal. We believe that this slogan, especially relevant in today's time. And to realize this vision, our originality and changing strength has to be refined, which is expressed in this page. I want all employees to be the people who care about others, challenge the real things and pursue beauty. In terms of both beauty -- value creation and communication capabilities, our company has unique strength. We approach human throughout their lifespan and conduct research targeting the entire skin, body and mind, and we propose a new culture that appeals to the senses and deliver it to our customers with the spirit of hospitality. No other beauty company does this. We will revisit these strengths to enhance our brand and maximize our corporate value. In order to integrate financial and nonfinancials, we have also reviewed our materiality from a business perspective. Please see the appendix for details. Based on these strategic pillars, accelerate growth with brand power, evolve global operations and drive sustainable value creation, we will accelerate the creation of corporate and social value built on our strengths. Our ultimate goals are to achieve above-market growth, sustainable profitability improvement and double-digit core OP margin through our efforts and despite an uncertain market environment. And first 2026, adhere to the 7% profit margin target set out in our action plan. Furthermore, optimize our cost structure to add 3 percentage points to our margin, achieving 10% margin. Profit generated through efficiency improvement will be reinvested in our brands leading to high-quality growth. We expect growth to be between 2% and 5% and achieving target of 2023 as the 10% or more OP margin. From here, I will go through each of the strategic pillars in detail. First, let me begin with accelerated growth of brand power. Going forward, we will concentrate our resources on categories where our R&D strength and competitive advantages can be maximized and which also offer attractive market size and growth potential. At the core of this focus will be skin care and sun care, followed by makeup, fragrance, medical beauty and derma and lifestyle. In addition, we will explore new value creation opportunities in areas such as elderly and beauty checkup businesses. For other categories, we will adopt a more efficiency-driven approach tailored to the characteristics of each market. We will not pursue M&A or diversification merely for the sake of expanding scale. We are defining category-specific strategies grounded in market dynamics and our competitive advantages. Skin care, our largest in core category, will continue to deliver stable growth and strong profitability with strategic deployment of cutting-edge technologies. Preparations are complete to launch high-impact new products that will drive future growth. In Suncare, we will aim for higher growth, leveraging both the market environment and the advantages of our proprietary technologies. We will actively pursue expansion into new markets. In Makeup, we will challenge ourselves to create new categories exemplified by innovations such as serum foundations. In Fragrance, we will strengthen the brand portfolio while accelerating global expansion. In Medical & Derma, we will reinforce existing brands and create new growth opportunities in medical areas where our technological leadership can be fully leveraged. In Lifestyle, we will sharpen brand concepts, enhance product offerings and nurture growth. We will allocate brands aiming to position as category champions to each growth area to ensure solid growth. We will continue the thinking of the core brands, those exceeding in JPY 100 billion in sales as well as next brands, which target to be the next JPY 100 billion brand. At the same time, we are reassessing the positioning of each brand based on their cultural current situations. Shiseido will leverage its established scientific strength to explore expansion into the Medical & Derma area. ANESSA will capitalize on a strong foothold in Asia to pursue global expansion. Fragrance, which was traditionally EMEA-centric, will now aim for accelerated growth across all regions. Additionally, in high-growth areas such as Medical & Derma, lifestyle, d program and BAUM will be strategic investment targets and nurtured for growth. Brands with unique value propositions such as Drunk Elephant and IPSA will have their growth and profit models reassessed, guiding future investment decisions. Breaking down growth by brand through 2030, the core brands will aim to expand profits with their high profitability and stable growth, leveraging their scale. Next brands will focus on accelerated growth with Fragrance and ANESSA contributing through expanded regional presence as well. Across all focus brands, we will ensure growth that consistently outpaces the market. This slide illustrates how we will achieve the growth. Instead of relying on favorable market conditions, our growth strategy is fundamentally about creating growth with our own hands built on the strength of our technology and research and development capabilities. About 70% of the growth through 2030 will come from further development of new and hero products through innovation. In addition, we will supplement growth through geographic expansion and ventures into new categories and areas. We will also continue brand and SKU optimization to maximize profitability from growth. Going forward, our growth will be driven by overwhelming innovation. We will lead the market with our innovation. Our proprietary research and technology strength will deliver greater and more impactful value to consumers quickly through 2 approaches. First, leveraging technology at the core specific brands. For example, ELIXIR represents collagen science. We will deploy distinctive technologies in our focus brands to sharpen brand value. Secondly, corporate-wide application of technology. The strongest technologies will be applied across multiple brands and products, generating scale and making the technology itself a source of competitive advantage. We have already identified more than 10 technologies to be deployed company-wide by 2028 with a concrete new product pipeline in place. Even in an uncertain market environment, we are confident that by realizing market creation through this lineup of compelling new products, we will be able to emerge as a winner. We will also accelerate growth by expanding global reach. In Fragrance, we will capture growth opportunities in Americas and Asia Pacific, strengthening our global presence. In Suncare, we will pursue expansion into the EMEA and Americas. Clé de Peau Beauté will leverage its differentiated brand value as a luxury brand to deliver unparalleled brand experiences to affluent consumers worldwide. So the next is to expand into new categories -- in the derma and medical markets are becoming more fragmented and diverse. We intend to further strengthen our approach towards aesthetic medicine and believe we can expand our business to over JPY 100 billion in the future. Lifestyle is an exciting area for Shiseido, which has led the way in creating a new cosmetic culture with BAUM and IPSA. We aim to establish a brand structure that satisfies not only the skin, but also the body and mind. We will expand into a new domain by using our proprietary assets, one of which is to provide value tailored to each life stage. By 2030, 1 in 3 people in Japan will be over 65 years old. This generation has high disposable income and desire to spend enjoying active lifestyles. If we can encourage this generation to enjoy beauty more, a new and big market can be built. As a leader in anti-aging care in Japan, we are determined to establish overwhelming presence here. Furthermore, we will promote further beauty checkups as our competitive advantage based on accumulative knowledge. 33 million women undergo health checkups in Japan. So of which, assuming that 10% of them will regard beauty and wellness holistically and spend on beauty checkup service, it is possible to create a market worth tens of billions of yen, and we will aim to increase sales of ancillary products by endorsing behavioral change triggered by beauty checkups. Next, we will promote strongly a new business and value creation model, leveraging our assets. In order to capture latest diversifying needs and rapid environmental change, a new value creation mechanism will be introduced, which is not driven by brands. This approach is driven by technologies, social media trends and co-creation with other industries and will quickly commercialize and launch products while monitoring consumer reactions to expand our business. This team will directly report to CEO, pursuing business opportunities and models that differ from existing businesses with speed. Customer touch point with brands will evolve from just product sales to a deeper brand experience. Maintaining and expanding a strong brand loyalty base is essential to the sustainable growth of our business through experience. Here again, we will leverage Shiseido's strength to create deeper connections between each consumer and the brand, achieving high-quality growth and improved marketing efficiency through a multifaceted approach. We will manage our portfolio with discipline and strategy, streamlining non-focus brands to ensure overall efficiency and further strengthening core brands, while maintaining appropriate financial discipline, boldly take on new challenges in order to respond quickly to market trends. The second strategic pillar is evolve global operations. We will pursue overall optimization through the value chain from 2 perspectives. First, global optimization; and two, lead time reduction by clearly defining the categories and brands to reinforce. We will clarify priorities across the company and achieve overall optimization. To achieve this, cross-functional teams across regions and functions will be organized, aiming to maximize speed and effectiveness of problem solving. The use of digitization and AI technologies are essential to achieving overall optimization. So first, a unified global IT systems and advanced business management will be built through the stable operations of focus. This will improve plan and planning and demand forecasting accuracy and reduce uneven inventory distribution. We will also carefully select and optimize IT investment, such as reducing outsourcing costs and eliminating legacy systems further strengthening the AI investments to enhance our technological assets and value development capabilities, advance and automate back-office operations and improve customer experience and loyalty. Our global organizational operations will be changed into a structure to reinforce our functionality and overall optimization and evolve into a highly agile global organization. To date, regional headquarters have operated their business independently. But going forward, we will strengthen collaboration between region and functional departments of global headquarters. This change will make the global headquarter structure more compact and focused in leading company-wide strategies. The new executive structure announced today will further deepen global unity. The third pillar -- strategic pillar is drive sustainable value creation. Employees' growth is the most important focus in our talent strategy. By expanding opportunities to take on new challenges, we will develop global leaders and define and instill Shiseido's value, fostering a sense of unity within the organization and a passion for value creation. By implementing these measures based on the organizational evolution described earlier, we will strongly advance our talent development. Over the next 5 years, we will invest 3x the level of 2025 in developing leadership, including global mobility. Creating value through DE&I directly improves our business activities. Therefore, we promote gender equality and respect on human rights as well as empowering people through the power of beauty. Goals for each activities are set and promote across the company. Each activity contributes to improving brand equity and strengthening our operational efficiency and enhancing risk management, directly enhancing the corporate value. With respect to environment, the Shiseido circular model will be built to enhance sustainability for both people and the planet and contribute to realization of rich natural environment. We will promote environmentally conscious manufacturing, sustainable product development and sustainable and responsible sourcing. KPIs are shown. We embody the model of our company name. How wonderful it is the virtue of the earth. Everything comes from here.
Unknown Executive: From here, I would like to explain about our financial strategy. Our target for 2030 are core operating margin above 10%. ROIC above 10%, ROE above 12% and free cash flow exceeding JPY 100 billion. A major theme of this midterm strategy is to transform the company into one that can consistently generate ROIC above its cost of capital. The current action plan focuses on strengthening financial discipline and fostering an organizational culture that aggressively pursues returns. Based on past trends, we believe we have clearly shifted course and are steadily on an improvement trajectory. We have described fiscal year 2025 to be a critical year, and it indeed proved to be just that. While the path was far from easy, we are confident that the structural reforms implemented to date were necessary and correct steps to build Shiseido's future. Over the course of this midterm plan, we will take further steps to lift core operating profit margin, ROIC and ROE into double-digit levels while continuing efforts to reduce the cost of capital and maximize corporate value. Even in the 2026 plan, which already incorporates the effects of structural reforms, the SG&A ratio remains above 70%, reflecting a high fixed cost burden and a structure we recognize as vulnerable to external environmental changes. Looking toward 2030, we will maintain the current levels of marketing investment ratio and R&D and brand development ratio while reducing the COGS ratio, personnel expenses and other operating expenses. Strategic investment to maximize brand value and accelerate sales will continue. Part of the cash generated from past structural reforms and cost efficiency initiatives will be redirected to proactive investments in marketing and human capital. The R&D ratio will remain around 3% of sales, but with a focus on further improving returns. Investment allocation will be more targeted and prioritized in line with category strategies and brand portfolio strategies. The cost optimization measures listed on the right are additional to the current action plan and are scheduled to be implemented from 2026 onward with effects expected mainly from 2027 onwards. Key initiatives include optimization of the value chain and brand portfolio, cost efficiency through standardization and centralization following an organizational and reporting line restructuring. This is not merely cost cutting, rather through disciplined return-focused investments, we will enhance brand value and strongly support the transition to a new growth trajectory. Next, I will explain our regional strategy. For sales, our goal is to achieve growth above the market in all regions. On the profit side, we are targeting double-digit margins in every region. We also aim to correct the profit structure skewed toward Japan and China and Travel Retail and establish a more balanced and resilient earnings structure. In Japan, we have moved away from a former loss-making structure and currently achieve margins in the low teens. However, fluctuations in inbound demand remain significant, making it essential to strengthen the profitability of local business. We will continue initiatives such as improving workforce productivity and enhancing marketing efficiency through higher e-commerce penetration. In China and Travel Retail, margins already exceed 20%, but we aim to further increase profitability. The key is improving marketing efficiency. The brand value reconstruction, initiatives implemented to date will now enter a phase of tangible results. Off-line stores will be optimized selectively to provide differentiated brand experiences. Additionally, we will maximize growth and cost synergies through integrated management of China and Travel Retail. In EMEA, Americas and Asia, our market share remains in the single digit so presence is still limited. However, we are confident that our strong brands and technologies provide significant growth potential. By maximizing growth opportunities in priority areas and optimizing costs, we will drive profit improvement. We are often asked, Shiseido is strong in Asia, but can it really win in Europe and the U.S. With this midterm plan, we intend to address and overcome that doubt. Next, I will explain our cash allocation strategy. Operating cash flow will be primarily driven by improved profitability and inventory turnover, combined with cash inflows from asset-light initiatives, targeting JPY 500 billion to JPY 600 billion in cash generation over 5 years. This cash will be allocated with a clear priority order, capital expenditures, debt repayment and dividends. CapEx has historically been 5% to 6% of sales. But with the completion of IT investment cycles and strengthened investment discipline, we expect this to decline to around 4% next year and approximately 3% by 2030 with a focus on within depreciation investments going forward. For interest-bearing debt, we will maintain a target credit rating of A and manage net debt over EBITDA around a multiple of 0.5. Regarding dividends, we plan a total of JPY 130 billion over 5 years, averaging JPY 26 billion per year, up from the current JPY 16 billion, aiming for stable and sustainable dividend growth in line with business recovery. In the second half of the midterm plan, we plan to have enough cash reserves to remain after dividends, enabling flexible share buybacks and strategic M&A under disciplined financial management. Strengthening financial discipline is central to enhancing Shiseido's corporate value. We have structured the M&A framework, integrating the Americas team into the global headquarters and establish an investment and divestment committee to clarify criteria and screening rules for investment and exit decisions. This will enable the company to execute disciplined and agile decision-making. Finally, I will discuss the establishment of ROIC-driven management. Strengthening financial discipline and embedding a ROIC-focused management approach cannot be achieved overnight. However, introducing ROIC as a long-term incentive KPI represents a significant step forward. And starting in 2026, we will ask -- we will also link operational KPIs tied to ROIC improvement to the annual bonuses of all executives. This will be steadily implemented as a power tool to foster a high-performance culture across the company. Lastly, from myself, I strongly recognize that transforming our organization culture is essential to executing our midterm strategy going forward. After a few years of rigorous structural reforms, opportunities to pursue new value creation and the enrichment of beauty culture have been lost and the essence of Shiseido's unique organizational culture has diminished, which is a significant challenge for me personally. In our newly announced midterm plan, while achieving the financial targets as a given, we have also committed to fostering a culture that encourage challenges toward new value creation and an unrelenting focus on delivering results in order to continuously enhance Shiseido's unique corporate value. Now is the time to face people and society sincerely to keep questioning the meaning of beauty and even in time of difficulty to share genuine value with the world. We aim to nurture more Shiseido people who embody the spirit and to transform our corporate culture accordingly. Through these efforts, we promise to continue achieving essential and sustainable growth, remaining a company that shares new value with consumers around the world. In every moment, in every life, beauty, our history stands as proof that we have always faced people with sincerity, discovered new value and continue to pursue innovative creation. We believe this is our true strength, the source of our uniqueness that cannot be imitated. Together as one team, we will continue to engage deeply with beauty and share a culture of beauty that enriches people's lives. Thank you very much for your attention.
Operator: [Operator Instructions] So okay. So the ones who are wearing the scarf.
????: JPMorgan, Kuwahara speaking. Structural reform has -- must have been really tough, but you accomplished that. So very encouraging news. But this time, in the midterm strategy, you explained Page 24, and I would like to have different angles to ask. So average, the CAGR was average sales growth is 2% to 5%. It's very varied, right? So what is the situation with the 10% growth only, but what makes you achieve 5%? So is that because of the market growth opportunity? Or what is that positioning? What is the assumption differences. And also the cost optimization, 3 percentage points, you said that the expense management or resource -- human resource management and also the role cost as well. But the 3 percentage point increasing, that means JPY 30 billion must be done -- must be saved, right? So this is my rough estimate. So in that case, SG&A is less than 70% or so. Is that what you're thinking or like extraordinary losses type of line item, even without such kind of extraordinary items. But still, do you think it is possible to reduce this level?
Ayako Hirofuji: Okay. Thank you for your question. I would like to answer for the growth assumptions. So when we crafted this midterm strategy, so the growth in the market, how should we assess the market opportunity for growth? And as we target, we should be not influenced by the market growth. So that is what we would like to aim as a resilient position. But still, we have to admit that there are certain elements that might be affected. So even the market growth has flattened, but still we will grow like between 2% to 5%. But if the market growth is 3%, then we will achieve 5%. So that is our assumption here. So with respect to your second question about the cost optimization, in the presentation, Fujiwara-san explained that -- so far, the cost reduction, we were touching for the -- addressing the problem area. But this time, we want to have a more cross-functional and more opportunity to reduce costs. And by so doing such a thorough evaluation, we will see the cost of optimization. So that means 7% to 10%, whatever the market conditions would be, at least double-digit, the profitability should be ensured through this initiative. That is the financial target in the core in our midterm strategy. So at that point in time, what kind of primary cost that we should secure we -- at this point in time, we do not have any answers and do not want to disclose. However, for the temporarily -- sorry, not the primary, but the temporarily or extraordinary costs, we do not anticipate at this point in time. But whatever happens, we will disclose at the right timing. Let me double check. So the extraordinary cost or temporary costs you just referred to in the cash flow management and asset-light management that you referred to earlier in the profit and loss, whether that will be reflected. But in order to -- while you are promoting the asset-light and there are certain losses that could be more mitigated because of the asset-light operations, then that could secure the dividend and so forth. Is that correct understanding? Yes, that is right.
Operator: With the base jacket. We go on to the next question.
Mitsuko Miyasako: My name is Miyasako from Mizuho. So sales, 2 to 5 is what I want to ask. And you've talked about it from the brand axis, but you haven't mentioned it from a regional axis. So could we have some kind of a metric for regional basis as well for the sales?
Kentaro Fujiwara: Regional base growth. We did not disclose today. But as Hirofuji-san mentioned earlier, Japan, China and TR, we do not foresee a high growth in these regions. And of course, in these regions, we will continue to aim for growth with capturing new markets as well. However, we want to look at the areas where we can grow more for profitability as well. Now on the other hand, for EMEA and Americas, the Shiseido share is still small. And for EMEA -- the brands -- EMEA and Americas, the Shiseido brand has a high brand position. However, there's a lot more potential for us to grow in Skincare and Fragrance, and we already see that opportunity for growth. And for Asia, similarly, the brand Shiseido is strong, but for example, Clé de Peau Beauté compared to the competitor still is a bit weak. And to say furthermore, it will be for the market going forward. Of the fragrance that we carry, we see that as a great opportunity in regions like Asia. For Americas, the biggest market globally in the U.S., brand portfolio, how do we maximize our presence into the U.S. market? So there's the brand Shiseido, NARS, Dr. Dennis Gross and Fragrance. And each of these brands, we do have a great opportunity for growth. So we believe that the growth speed will be faster in the EMEA and Americas.
Mitsuko Miyasako: How would you be growing the Shiseido in Americas? Can you elaborate on that?
Kentaro Fujiwara: This year, too, in the Americas, so yes, we do have struggle with Drunk Elephant, for example. However, brand Shiseido has been having solid growth. So with that in mind, one is we will look at product allocation that matches the Americas market. Secondly, what we have announced today, Alberto Noe will be official CEO for the Americas region. He has pushed Shiseido to be #2 in Europe in this very competitive market of EMEA. So with him taking over in the Americas market, we believe that he can push the Shiseido's presence in the Americas. And for channels, for EC, brand Shiseido still has a lot more room for growth. So there are already growth opportunities that we have already set and visualized.
Takashi Miyazaki: Miyazaki from Goldman Sachs. So again, regarding the growth of the sales. So as you talk about the channel, I would like to ask a follow-up question. So between the CAGR of 2% to 5%, what is the ratio or composition of the e-commerce? And also in Japan e-commerce in the third quarter, you had quite a good result in Japan e-commerce. So -- and owned channel as well. But on top of that, you did some initiatives. So are there any opportunities that you are thinking? And what is the composition overall?
Unknown Executive: So in terms of the detailed composition of the e-commerce, we do not disclose. But something happening in China that is very much accelerating that can be observed in Asia, Europe or U.S. So we believe that is the trend, especially for EMEA, it's not just owned, but the retail dot-com or pure player also grow their results. So for those, we are investing ourselves.
Takashi Miyazaki: How can we make the operations or manage that?
Unknown Executive: Well, we will begin from China, especially for internalized such operations going forward. Internalize means that we ourselves will look at the e-commerce data and do not rely on the third-party data. We will create our own content and manage the data. So those are operated by internal team. So that will be leading to the next AI, the operations. So we believe this is very essential. So when we does that, if we can do that, we will be able to replicate that know-how into U.S. or other regions. And owned e-commerce is quite good. So in Japan, this is very good because we will be able to approach to consumers directly as owned. So this is good. And also, we can expand to pure players as well. So that means we can collaborate with the pure players well, and we will be able to have more resources and grow together. So this is a good cycle. And roughly 20% or a little less than 20% of the composition but we would like to grow this e-commerce channel, especially in Japan, we have a beauty equipment. So e-commerce and off-line, we will have a good beauty staffers as well.
Operator: We'll go to the next question in the front row.
Katsuro Hirozumi: My name is Hirozumi from Daiwa Securities. I want to talk a little bit about 2026. A year ago, what you had shown us the core OP of 7%, it's great that you were able to keep that. But can you -- I want -- I would like you to clarify this. So this fiscal year, as you have mentioned, global cost reduction so JPY 1 trillion in sales and 7% of that, so it's JPY 70 billion. So if you achieve JPY 35 billion, how do you foresee the JPY 70 billion? So to the JPY 70 billion, how visible -- how do you see that to be a reachable goal? And at the same time, there's the non-ordinary income and nonrecurring. So what do you see? So the core OP ratio of 7% but you have the JPY 70 billion that you're looking for. So how much do you see in the nonrecurring item? How do you see that going forward?
Unknown Executive: That's the detailed construction of next year's -- the numbers for fiscal years, we do not disclose the details of how the numbers were created. But to your comment, GTC is something that we are pushing solidly. And the things that we should see as tangible results for next year, it's already executed. So on top, we see that as an add-on to the GTC actions. So with that in mind, there is -- as for the sales growth, we are not disclosing the details, but some of the marginal profits that are achieved from what we have, yes, we want to put that on to the add-on. So JPY 25 billion you said is for sure.
Katsuro Hirozumi: So you mentioned JPY 25 billion to JPY 36.5 billion. So that would be JPY 61.5 billion. Is that for sure?
Unknown Executive: That said, there's inflation, there's a tariff and other and some of the costs to achieve the sales. So there will be potential cost increases that may arise. So yes, there is a potential cost increase that will come.
Katsuro Hirozumi: So how can we offset that with the marginal profit that we achieve. So for the nonrecurring items, how do we see that for 2026 and onwards?
Unknown Executive: At the moment, we do not disclose the details at the moment for that as well. Maybe if you can cooperate with me.
Katsuro Hirozumi: So what is this year's nonrecurring items?
Unknown Executive: What we have shown in the forecast, it's JPY 78.5 billion in nonrecurring items. So due to the Americas depreciation that we have seen a big loss. But the JPY 78.5 billion, majority of it, about JPY 15 billion is noncash. So I would like to add on to that, that part is noncash. So to that, it's not something that would impact the dividend payout. And in this year's P&L, in terms of cash creation power, we actually were able to improve on that and improve on the profitability, if you look at from the cash basis. So the free cash flow was actually a big improvement from what we was initially forecasted. So there is the impact from all the structural reforms that we have been doing, and we are seeing tangible results from it in our numbers.
Operator: So any other investors?
Unknown Attendee: Congratulations for very strong cash flow generation this year. Could you tell us for next year, 7% operating margin compared to when you set that target, how confident do you feel you can achieve this number?
Unknown Executive: I think we would like to be firmly committed to achieve that 7%. Of course, there are various factors that we cannot foresee. Tariffs is one of them. Of course, inflation is also an issue. However, we are confident that our cost initiatives will bear results for next year, and we have a much better P&L structure than compared to before. And this gives us a good position to realize the growth into firm improvements of our profitabilities. So we would like to continue to be firmly committed to this target.
Unknown Executive: In addition, so the first thing we can realize is to the culture in the company. So in this year, we're also having some extraordinary negative impacts but however, these teams are always seeking the additional or the new opportunities in order to achieve our commitment. So this is also one of the very strong good point to achieve for the next year target.
Operator: Now we'd like to receive some questions from the online participants from Jefferies, Kawamoto-san.
Hisae Kawamoto: I'm Kawamoto from Jefferies. Prestige Skincare, looking at the future and how -- I want to ask a little bit about how you look at the focused items. The Skincare mass items are growing in popularity. So -- but within that, the prestige, do you think the demand will come back even with this inflation environment? And ELIXIR, you will start to sell self-sales in the Southeast Asia. In the midterm plan, within the 2030 sales, prestige and mass, how do you allocate the sales? Or how do you foresee the sales allocation of prestige versus mass?
Unknown Executive: Thank you very much for your question. First of all, for Skincare, prestige, it is true the mid-price range is contracting or shrinking a bit. And so the consumers are moving more to prestige or to the mass. Especially looking at the prestige market, they're looking for more high functionality, new technology. And the category that captures that is growing, specifically cream and essences. And anti-aging, which we are strong at, we're seeing a high-end upgrade into high price points. So for this prestige area, we do believe not just for Japan, but globally looking, there is room for growth. There's opportunity for growth. For ELIXIR, fortunately, in Japan, the second half as well, we've been able to capture high growth. At the same time, in Asia, as you have briefly mentioned, self, we are planning to sell ELIXIR from a self sales channel. And we have built confidence as we have captured very high sales. And it's not for us to just expand on the number of stores, but the self-sales stores. What we have succeeded in Japan, we want to deploy that into Asian countries, Asian areas. And the agents that come to Japan, they're coming into Japan to purchase the hero products. So the success cases that we have had in Japan and the hero products that we have captured great success in Japan, we want to expand that into Asian and Southeast Asian countries, especially in self-channels like drugstore channels that will -- without the cost, then we believe that, that will give great contribution to the sales. And in China, temporarily, we did have a big dip. However, we do want to challenge ELIXIR in China again. And Clé de Peau Beauté, brand Shiseido and ELIXIR are the 3 pillars of the skin care business. On Page 58, I noticed that Japan Prestige Skincare, so for example, EMEA, some of it's growing double digit. But from the treated water issues, there were some issues in sales, but that's recovered. And would you say that globally looking, Prestige skincare from Japan, you would say that they have -- you have solid grounds to that, and there is sustainability going forward? Yes. In terms of some of the reputation damages that we've had, we believe that, that has been recovered. And to be honest, K-Beauty is progressing globally. And with that, J-Beauty is something that Shiseido, we need to expand and we need to push forward as well. We feel that as a mission as a company from Japan that we expand on the J-Beauty. So we want to continue to provide the value from Japan to the world.
Operator: Next, Ohana-san from Nomura Securities.
Yuji Ohana: So my name is Ohana from Nomura Securities. So you have the provision for that was the nonrecurring items, of JPY 55 billion additional, and you made the revision. So the JPY 47 billion is about Americas impairment loss. So there will be a little less than JPY 8 billion. So what -- where does this number come from? In Page 5, there is the global headquarters, early retirement program. But -- so JPY 25 billion next year, so cost efficiency, that is already embedded in that JPY 25 billion. So it's not new. Is that correct to understand?
Unknown Executive: For nonrecurring items, as you say, at this point in time, cumulative JPY 63.4 billion. So the fourth quarter, JPY 15 billion, that is the plan for the fourth quarter, JPY 15 billion. So ERP-related cost is JPY 3 billion, of which JPY 15 billion. So the rest is that office rationalization or structural reform-related costs and other -- some other initiatives going on through the global team. So those structural reform-related costs are the ones that I described earlier. So those temporary costs will lead to the fixed cost reduction in the future, and we are implementing such measures. In terms of the ERP, JPY 3 billion is the temporary cost impact, but the cost reduction impact overall. So through this ERP program, it's not just only that, but the natural attrition and also curbing some of the hiring numbers and through such a -- some reduction in the hiring, JPY 5 billion or so per annum impact is also included, not just ERP, but such natural attrition and so forth. So ERP is happening realized in the Q1 in next fiscal year. So that means a little less than JPY 5 billion of the cost impact will be expected for FY 2026.
Yuji Ohana: Let me double check. JPY 47 billion, ERP, JPY 3 billion and office optimization, JPY 5 billion. Is that correct? So to come up with the JPY 55.5 billion.
Unknown Executive: Right. ERP, JPY 3 billion and the rest are which includes the temporary cost impact for the office and so forth.
Yuji Ohana: Okay. Then the headquarters, global headquarters, rationalization or ERP, that's already embedded.
Unknown Executive: Yes, you're right. That was already embedded.
Yuji Ohana: So that means that JPY 25 billion is already secured because you've already planned this ERP and so forth and then have a more solid forecast. So it's not just add-on.
Unknown Executive: That's correct. It's not the incremental.
Operator: One more from online participant. SMBC Nikko, Yamanaka.
?????: This is Yamanaka from SMBC Nikko Securities. What I would like to ask growth by brand, a page with the growth by brand. Page 29. Yes, thank you. Page 29. I want to understand this a little bit more, and I want to deepen my understanding on this page, Page 29. So looking at this Page 29, core profit expansion, Shiseido, Clé de Peau Beauté the gross growth is high. From your explanation, there's China, then other big markets. Well, of course, you'll continue to aim for growth. But there's also -- you want to grow the hero SKUs in other areas, as you show in the other page in the next page, Page 30. So with all that together, you're looking at the low single digit of CAGR. Can you share with us the decomposition of this?
Unknown Executive: The numbers by brand, the details and the composition of the numbers by brand, we do not disclose. But expanding profit and accelerating growth. So for the growth rate, next brands, of course, will be higher in terms of the growth rate. For the core, the size, the scale is big. So incrementally, it will look like this chart. But if you were to compare the next brands, the growth rate ratio will be higher.
?????: So in the brands under Next, the fragrance, I want to ask about Fragrance. So on Page 28, you have the brands listed. Max Mara Parfum so that's a big launch that's got high expectations. Is that correct to say? And/or each of the brands have a high growth rate? Can you elaborate a little bit on the Fragrance?
Unknown Executive: First of all, for the brands, Max Mara will be starting from next year, and that, yes, will be a big incremental add-on. And the growth of the existing brands, the Fragrance grew primarily in Europe. But now that Alberto Noe will be looking at EMEA and Americas, we can see an acceleration of growth in the existing brands. In Americas, even for Fragrance, it is a huge fragrance market, the Americas, but we did not capture full investment nor did we try to challenge growth in Americas through fragrance. That's something that we see as a big opportunity. And so that's -- those will be the big drivers for the big growth in terms of global expansion as well.
Operator: Any other questions from the floor? Kazahaya from UBS.
Unknown Analyst: Yes, total of 3 questions. So first, China and TR. So you made the downward revision, but you did not change your outlook for those 2, and it is improving compared to your original expectation. So can you describe further what is driving why the result was better than you expected and also the market outlook? That is my first question.
Unknown Executive: For China and travel retail market, especially for China market so there were some huge volatile market. Ups and downs are quite radical, but that situation is now stabilizing. And for Q3, overall market has now turned to positive. And especially in channel, online channel is driving the growth. Therefore, for the third quarter, our business grew, and we are taking some market share. So we are confident in that. And in fourth quarter, this trend will continue according to our assessment, especially Double 11 will already be gone and it's almost ending, but that result looks like quite good and promising. So China, for sure, is recovering in terms of the market strength. But the next fiscal year onwards, so of course, we cannot be complacent. And especially for offline, since the online is so good, we have to watch carefully about offline. And brand Shiseido has been struggling this year, and we expect that difficulty will be settled. So that means that we would like to expect some solid growth in next year.
Unknown Analyst: So my second question is that -- Page 41. So this is the matrix organization and that you are going to advance that. So I'm sorry, I don't understand personally. So Hirofuji-san as your capacity as CFO, can you please describe in your finance division, how it will look like going forward?
Ayako Hirofuji: Okay. Then for CFO, so region headquarters system was adopted. For example, in finance, so region CFO was reporting to region CEO only. Therefore, no report line to me in the past. Therefore, as a result of such structure, region or each region had adopted the decision on the optimized within the region only. That is a reflection. So we created the region CFO report line to headquarter CFO. So we can preside over the regional financial situations and also the risk can be identified at the earlier stage and take some actions. So we would like to have a good result coming from this structural reform. But of course, reporting line creation is just one of the first steps, right? So all those difficulties in the past cannot be resolved only with this structural change. So the first next year, we will adopt this new organization change. But definitely, we need to uplift the skill sets locally. So at the same time, and of course, there has to be continuous initiatives. So this is a long journey. As I speak to our team, financial governance and discipline has to be adopted going forward. Therefore, we need to pursue the overall optimization as we select as a big theme.
Unknown Analyst: The third question. So you've announced your midterm plan today. The employees, how are your employees and your business partners? I think you're going to go into a phase where you have to change the mindset of your employees as well as your business partners. You were able to share with us. But as a CEO, what kind of messaging do you give to your employees? And in order to thoroughly implement this midterm plan, what kind of management layer changes? Or how will the management layer take different action going forward?
Ayako Hirofuji: So yes, to your point, when we make a plan, that's not the end. We have to penetrate this throughout the system. One thing to mention is it's not just messaging from myself, but with this midterm plan, each of the executive officers, we have shared this content before this official announcement. And also in order to really realize this, what do we need in each of the areas? Furthermore, what do we stop doing in areas? So we've had the officers -- executive officers start considering this already. And what I talked about was more of the overall company globally. But from here on, we will start launching cascading the message down throughout the organization. And for this, too, this is really the start for us. And now going forward, looking for next year, I would like to speak directly with the employees and travel overseas as well to speak to the employees in our overseas offices as well. So I want to continue to thoroughly penetrate and execute the midterm plan and if needed, adjust it or make adjustments if needed, but thoroughly make sure to cascade this throughout the organization globally.
Operator: We have 10 more minutes. We would like to take as many questions as possible.
Unknown Analyst: If I may select one question to you, Hirofuji-san. As CFO, you explained your strategy toward 2030. I fully understand. But as the representative executive officer and very relatively young representative executive officer, beyond 2030 or even 2040, how would you like to see Shiseido eventually very long term? What is your perspective?
Ayako Hirofuji: Well, very unexpected question. Thank you. So 2040, we still were not able to consider something. However, personally, as we want to achieve the global beauty company, definitely, we would like to achieve that, and we have a strong mind. And to this end, we undertook the structural reform in a series, and we have a growth plan and also the more selective and try to drive growth. That is our approach to craft this midterm strategy together with Fujiwara-san. So of course, the small-sized global brands can grow and shine eventually in 2030. So that kind of bright future can be achieved. If that happens, the true global company can be embodied.
Unknown Analyst: I wish you could talk about more beauty, about beauty. So maybe I will turn to Fujiwara-san. It's a follow-up question. Okay. Like every moment, every minute, beauty. So this slogan was selected. Can you please describe once again, imprecisely because you have a strong determination to select this, right?
Kentaro Fujiwara: In every moment and every life, beauty. So when we craft that, it is very difficult for us to foresee the market future. And in our way, our unique way and try to grow the company, that means we should not be controlled by the market growth. So what -- how can we ensure that? That's the kind of discussion we had. And to do that, we need to leverage our core value. What does it mean that? So our new cosmetics culture will be built through our core value. So that is our strength as well as our pride. So that's back to basics. It's been the whole time. Shiseido has been not looking at the market, if I may say, we were looking at the people. We were looking at the consumers and always focusing on people. And as we continue to do so, what can we do? We can be close to people or customers. And also, we want to deliver beauty on their daily lives. And we will have this slogan is the most suitable from that perspective. And this could be a more trend or sometimes people may have more dispersion or division and isolation, maybe such a slogan so such a word will be more relevant than the past. So of course, this slogan, once again, to reaffirm that, that is, of course, has a big commitment and also needs some confidence, but we believe that this slogan is more relevant to us right now. I love this slogan.
Operator: Are there any other questions? We would like to prioritize the first question.
Haruka Miyake: My name is Miyake from Morgan Stanley. I apologize for my raspy voice. I have a cold. Because we're talking about long-term strategy, I feel bad that I have to rewind back. But -- so for this 2030 plan, core operating profit and operating profit is -- you said that there -- you don't want to have such a big gap between the OP and the core OP. But 5 years still is a longer period. So the sales and core operating profit and net profit each of the trajectory image, can you share with us the image for your trajectory? The reason why I ask is if the sales -- there could be a scenario where the sales is flat as globally, it's an uncertain world. I believe that there is such a potential for next year. So for the sales, the second half, maybe are you looking at it weakly or looking at it from the rebound, are you looking for more acceleration in terms of the sales? And as you add up the profit, you'll have the cost reduction impact. And if that's going to happen in the back end, then what's the cost impact? I think that's going to -- there's going to be a time lag for that. So the sales and cost, what kind of trajectory is there because there will be some time gaps or time differences when you will see some results.
Unknown Executive: I apologize that we can't disclose everything to you in detail. However, we don't plan to have such a volatile forecast. And for sales too, for now, we do have a quite linear target or forecast. Of course, there are different reforms and initiatives that we are doing and that we should continue doing. And so as for that, that's something that we will continuously do in terms of structural reform. And to do so, we have the 2030 double digit. That's what we want to achieve in 2030 to double digit. And that in itself, we will start doing what we can from -- we will start with what we can in the moment with agile movement. So at this point, do we see any kind of expense costs that we're going to add up at this point? No. So looking at the overall optimization or global optimization value chain overall. So this too, as I have been doing the structural reform for the past 2 years, this is something that I've been feeling. So when you see the big chunk of the reforms, it's easier to just go ahead and execute. But while we're executing, looking at the overall value chain, we can see like, Oh, if we do that, there could be more impact. Well, this is a challenge in supply chain, but if the brand holder and the R&D work together, then the impact will be much bigger. So there are many items and challenges that we saw as we were working on this like that. And as we worked on the global organization, if the corporate functions were more cross-functional, and the reason why we're doing -- trying to do more cross-functional is because what we see in front of us to what we see in each of the region, it's not a partial optimization. What is optimized as a whole, there's more fruit or benefit from that. So of course, yes, there could be the time gap of when the impacts are actually achieved. However, the faster we start, of course, the impact will be quicker to be achieved. So those are the things that we will continue to do, aiming for 2030, we set the agenda, and we will like to promote this with a cross-functional team. And to that, there will be the market growth and there is sales from our value creation that is an add-on of organic growth. But looking at the market, yes, as the market may fluctuate or may be volatile, we want to continue to have a certain level of flexibility as we manage our company. So if we set one specific number, the focus is too much on that number. And of course, we will always have an aspirational target number, but we don't want to push ourselves in the wrong way so that we would end up increasing a negative debt for the future. So that's why we wanted to have a little bit of flexibility going forward, and that's what you see in the 2030 target.
Haruka Miyake: If I could just have a follow-up question. 3 points cost down -- the cost down by 3 points. Yes. There's operational aspects as well as there are some of the fixed cost reduction. But as an image, fixed cost versus some of the variable costs, what do you see an image of what the allocation will look like?
Unknown Executive: As for the details to that, we do not disclose nor announce in this session. But as you see on Page 48, the cost of optimization menu, these are the items that we will continue to work on.
Haruka Miyake: So the detailed numbers will be cascaded down to the organization. Is that what you just said?
Unknown Executive: Yes. To a certain level, yes, we do have the menu lineup already, and we are at a level where we are ready to cascade it down to execution point. But moreover, we need to change the culture to really follow the profitability to really go after the profitability. So the cultural change is something that we are changing so that the company to 2030 will definitely have a ROIC that is exceeding the WACC level. We want to make sure we have a ROIC that exceeds the WACC, and that's a very strong commitment that we have in our minds. Thank you very much.
Operator: Now we covered all the questions. Because of the time arrived so we would like to end today's session. So thank you very much for your attendance. So we would like to end today's earnings presentation. So thank you very much for your attendance for a long period of time.
Unknown Executive: Thank you so much. [Statements in English on this transcript were spoken by an interpreter present on the live call.]