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Akira Waniko: Hello. This is Waniko. Thank you very much for joining us. I will now give the overview of the FY2026 Q1 financial results. First, the summary. Sales increased in all segments, but overall sales decreased with the deconsolidation of automotive. By business, sales of generative AI-related businesses in industry and energy increased, in addition to increased sales of process automation and Connect. Adjusted operating profit increased overall due to increased profit in all segments, offsetting the impact of US tariffs and the automotive deconsolidation. Net profit increased due to an improvement in income taxes. Despite a deterioration in nonoperating income and loss, operating cash flows decreased YoY, due mainly to the automotive deconsolidation. For the fiscal year ending March 2026 full-year forecast, the group-wide forecast remains unchanged. The impact of US tariffs from fiscal year ending March 2026 Q2 onward has not been factored into the current forecast, since the situation remains fluid and requires more time for careful assessment, given the recent major developments. The forecast by segment are revised for Connect and other/eliminations and adjustments. Now, the details. For the consolidated financial results, sales decreased YoY by 11% to JPY1,896.7 billion, while sales excluding automotive increased by 2% YoY. Adjusted operating profit increased to JPY91.5 billion. Operating profit increased to JPY86.9 billion, and net profit increased to JPY71.5 billion. These are results by segment. The next few slides provide the YoY variance analysis for sales and adjusted operating profit. First, the sales analysis by segment. In lifestyle, sales increased on steady sales of consumer electronics, HVAC, and the electrical construction materials in Japan. In Connect, sales increased on increased sales of process automation, capturing demand for ICT and EVs in China, along with increased sales of mobile solutions, Gemba Solutions, and Blue Yonder. In industry, increased sales were driven by increased demand for information and communication applications such as generative AI servers. In energy, sales of in-vehicle decreased, due mainly to the price revisions reflecting lower raw material prices, despite increased sales volume at the North America factory. Sales of industrial/consumer increased on continued favorable sales of energy storage systems for data centers, with the expansion of the generative AI market. Within other/eliminations and adjustments, sales of entertainment, communication, and housing increased. Adjusted operating profit analysis by segment, adjusted OP increased, offsetting the deconsolidation of automotive. As shown in the graph above, adjusted OP increased at all segments, particularly lifestyle and energy. Major increase/decrease factors by segment are described on this slide. These are the results of the lifestyle segment by divisional company. Profit increased in Living Appliances and Solutions, Heating and Ventilation A/C Company, and Electric Works Companies. The Cold Chain Solutions Company posted lower sales and profit, due mainly to the non-recurrence of special demand observed in the previous year. This is the YoY OP analysis by factor. From the left, on the basis of excluding automotive, increased sales in real terms, positive JPY30 billion. Increase in fixed costs, negative JPY12 billion, including the positive effect of restructuring of JPY2.1 billion. The net impact of raw materials and logistics prices, positive JPY14.7 billion. Price revisions and rationalization, positive JPY2.8 billion. Impact of US tariffs, negative JPY5.8 billion, mainly affecting energy and Connect. Blue Yonder, negative JPY6.5 billion on constant currency, due primarily to increase in strategic investments such as security enhancement. The effect of exchange rates, negative JPY6.4 billion, mainly affecting industry and energy. The deconsolidation impact of automotive, negative JPY9.6 billion and other income and loss, negative JPY4.1 billion, including restructuring expenses of JPY2.2 billion, resulting in the operating profit increase of JPY3.1 billion. This shows the cash flows and cash positions. On the left, operating cash flow for Q1 was JPY180.3 billion, with a YoY decrease, due mainly to the deconsolidation of automotive. On the right, net cash was negative of JPY745.7 billion. Next, the consolidated financial forecast for FY2026. This shows the consolidated financial forecast for FY2026. The group-wide forecast remains unchanged from May 9. Since an updated assessment of the evolving situation is still needed, the impact of US tariffs from Q2 onward has not been factored into the full-year forecast, as was the case on May 9. Next slide, I will explain the outlook of the changes in business environment and the forecast by segment. This shows the FY2026 business environment by segment. Changes in the business environment from the previous outlook of May 9 are written in gray. I will explain two key points. First, regarding the impact of US tariffs on our businesses, Connect and energy are relatively more affected than others. In particular, the impact is expected for in-flight entertainment systems under Avionics in Connect, battery materials and cell under in-vehicle in energy, and energy storage systems under industrial/consumer in energy. Second, regarding the business environment for energy for in-vehicle, our view remains unchanged about the electrification of vehicles at a certain level over the long term. However, we expect a slowdown in the EV market for short term, due mainly to the US tariff policies and termination of the IRA 30D tax credit. Contrary to this, for industrial/consumer, the demand for energy storage systems for data centers is growing more than anticipated from the outlook of May, with large-scale investment related to generative AI. I will explain the automotive battery business in North America on the next slide. This shows the trends in automotive battery sales at the factories in North America since Q4 of FY2023. Looking back at FY2025, our sales volume continued to grow each quarter, driven by our customers' appreciation for the advantages of our locally produced IRA-compliant battery cells. Following this trend, we forecasted an annual sales volume of 46 gigawatt hour for FY2026 in the forecast of May, giving consideration to customers' demand. However, following the rapid changes in the US tariff policies, along with the announced termination of the IRA 30D tax credit for EV purchases, among others, some slowdown in demand seems unavoidable from a short-term perspective. Regarding the outlook of the sales volume, FY2026, we are now considering whether to revise our forecast, due mainly to the policy changes. However, we expect the sales volume to surpass that of FY2025, despite slower growth. Now, despite the announced termination of the IRA 30D tax credit for EV purchases, 45X tax credit for battery cells and module manufacturers will continue, and our locally produced IRA-compliant battery cells retain competitive edge. Also, we introduced the new cell technologies, providing 5% higher capacity than the current cell at the new Kansas factory. And these are leading to the strong demand from our customers. Going forward, we will continue to pursue a business policy that aligns our growth with market and customer trends. This shows the full-year forecast by segment. In Connect, we expected to finalize the strategic capital alliance agreement for the projector and related operation when we announced the FY2026 full-year forecast on May 9. However, the agreement was mutually terminated, and the forecast of Connect has been revised accordingly. For energy, as explained in the previous slide, we anticipate a slowdown in the EV market in North America. On the other hand, for the energy storage systems for data centers, we are receiving much larger orders than expected. Recently, there have been significant developments in the US tariff policy. We need a certain amount of time to quantify and assess the impact. Therefore, we have not yet revised the forecast for energy at this stage. This shows the forecast of the lifestyle segment by divisional company. The forecast remains unchanged from the May 9 forecast. That concludes my presentation. Thank you for your attention.
Operator: From Bloomberg, Furukawa-san, please.
Furukawa: This is Furukawa from Bloomberg. About the in-vehicle batteries, I'm looking at slide 22, and you're talking about the Kansas factory, 32 gigawatt. This timing is, in effect, being postponed compared to the previous announcement. I would like to know the reason why. Also, can you give us the time line going forward? Also, the Wakayama plant, the description is exactly the same, for 4680, from three months ago. Can you give us the update on that?
Unidentified Company Representative: Thank you for your questions. First, regarding the EV battery, 30 gigawatts, or why is it postponed is your first question. I did explain that partially in my presentation. I might be repeating myself, but due to various factors, the EV market, particularly in North America, is expected to slow down, compared to our original forecast. We want to make sure we are in line with the demand as we ramp up our production facility. Based on the very same policy that we've been adhering to, this timing has been pushed back. When will we achieve the full production is your second question. If I could repeat myself, we are currently vetting the demand. We cannot say exactly when at this point in time, but it will be later than originally expected. Your second question regarding the Wakayama factory. As for the ramp-up of 4680 cell production, we are ready, technically. Regarding the specification confirmation with our customers and quality confirmation, we are still in preparation, but we will be starting the shipment on schedule.
Operator: Next, [inaudible].
Unidentified Analyst: This is [inaudible] from [inaudible]. Two major questions. First, this probably is not related to the business results, so you might not be able to answer this. But I think there was a press release for the new organization for next year. B2C, the consumer electronics and TV company, there used to be a Smart Life company. Now, it will be the same name, Panasonic Corporation. Could you explain the reason for that? That's my first question. Another question, a very specific question about the consumer electronics. For example, there have been some topics in relation to that. For example, there's an enhancement of the cooking appliances, how do you plan to do so? What is the current situation? There has been a lot of competition. How much growth do you see in this business?
Unidentified Company Representative: Yes. Thank you. To your first question, the press release, this is from April and onward. This is about the new organization. We issued a press release about the names of the companies. There used to be a Smart Life company, but concerning this, this will become the Panasonic Corporation. That's included in the press release. Concerning that, I think that for the market, in order to promote our consumer electronics products, using the name Panasonic is important. Also, transferring from the past, I think we want to lower the transfer cost, and by keeping the same name, that will be a more rational way from the cost perspective. Due to those reasons, we kept the same name, Panasonic Corporation. The second question about the TV, air conditioner, and kitchen appliances. Concerning those, Q1, the lifestyle, on page seven, actually, if you look at page seven, there are some details. We want to make sure that these divisional companies have achieved a higher profit. Now, about the cooking appliances, this is under the lifestyle appliance company. Higher sales and higher profit. This business has been recovering since last year. This is in relation to the enhancement of the kitchen appliances. Since last year, about the sites of the kitchen appliances, we have been emphasizing and focusing around the fixed costs. We have been trying to improve the strength. We are starting to see the results of those efforts in the lifestyle business. As for TV and air conditioner, I can explain the air conditioner on the same page. This is under the HVAC company. Here again, the higher sales and higher profit were achieved, driving the overall better performance of this lifestyle segment. Concerning this, as you mentioned in your question, because of the heat wave, the room air conditioners are very active and selling well. Air to water in Europe, there has been a stagnation of the demand, and we are starting to see the good recovery. This led to the higher sales and higher profit. As for the environment-related engineering area, I think that we have regained the strength. That led to a better performance for the HVAC company. As for TV, about the various reforms, including the cost reduction, we are working on that. We are not disclosing the divisions, each division, but we are not seeing any worsening, and we are making a steady progress in this business.
Unidentified Analyst: I see. Air conditioner in Japan, how much of the growth are you achieving? Could you talk about that?
Unidentified Company Representative: The most recent trend of the room air conditioners in Japan is actually about 120% YoY or 20% higher than the year before is being achieved.
Operator: Next is from Toyo Keizai, Umegaki-san, please.
Umegaki: Thank you. Umegaki from Toyo Keizai. Two questions. First, the full-year forecast, the gain on the sale of the projector business in Connect has been revised, and you are still looking for JPY50 billion positive for others. I think at the last meeting, you assumed that the impact of the US tariff would be about 1% on a consolidated basis. What is the update? Is it getting better? Or is it getting worse? Regarding the personnel, HR announcement made today, you are on the Board. I think you were involved in this question. I'm wondering why Toyoshima-san was selected as the CEO of Panasonic Corporation and Mr. Sain for other companies. Could you give us the reasons why these two were chosen?
Unidentified Company Representative: Your first question, the gain on the sale of projector business, JPY50 billion gain and JPY50 billion in others. That is the projection on a full-year basis. The revision in the Connector segment is directly as a result in relation to the projector business. At the beginning of the year, we were incorporating that. But now that has been terminated. We made the revision accordingly. As for others, JPY50 billion reversal, I cannot give you the specifics. On a full-year basis, we are still looking at the details. Looking at this one case alone, we did not feel that the revision for the whole Company would be warranted. As for the impact of the US tariff, initially, we were saying within 1% of the full-year sales revenue. On our announcement today, we are not incorporating the impact. We are trying to get hold of what the situation is, trying to update our information almost on a daily basis. Basically, we expect the impact would be smaller. If it's just the updating on the tariff rate, maybe the impact is limited. The question is what kind of countermeasures would be needed to address changes in the tariff rate. We feel that we have to have all these details confirmed before we make any announcement. As we become ready to give you a more quantitative response, we'll do so. That's my response to your first question. Secondly, regarding the announcement of the changes in President and CEO, Panasonic Holdings will be headed by Toyoshima-san and Connect by Kenneth Sain. What are the reasons is your question. As for Toyoshima-san, as you know, he was in the entertainment and communication company. He was leading that business as President. There are many reform needs to be implemented in the Panasonic Holdings or the Panasonic Corporation, and his experience is going to be very beneficial. He has a strong passion to lead this initiative. That is the reason why he was chosen to lead the new Panasonic Corporation. As for Connect company, Higuchi-san will be succeeded by Ken Sain. As you can see by looking at his CV, he has been on the Board of Connect. He has been involved in the management, and he has been leading Avionics. As for the Avionics’ business results, we were suffering in pandemic, but with a proactive lineup change, the reform has been implemented under his leadership. In the Avionics area, we need the integration of both hardware and software to improve the business profitability. We're hoping that his expertise will contribute to changing our business going forward.
Operator: Next, from Yomiuri Shimbun, we have Tabata-san.
Tabata: Yes, Tabata from Yomiuri Shimbun. I have two questions. First, what you announced in May, the 10,000 people personnel optimization, I'd like to know the progress so far. Once again, could you explain the aims or the purpose of that? Second is about the new organization you announced today. I'd like to know the purpose of that. Toward April next year, there was an announcement of the leaders. About the time frame, is it moving on track? There is also a restructuring portion, but if you can talk about those progress.
Unidentified Company Representative: Yes, understood. First of all, in May, we announced the optimization of the personnel by 10,000 and how are we doing on that? There are different movements in Japan and abroad. As for Japan, right now, each operating company is working on this. Depending on the needs of each operating company, they are promoting this optimization, explaining them to the unions, and explaining to the employees. We just started this plan. Concerning that, in Q3 and onwards, we would hear from all the employees. In Q1, if you asked about the progress, so far, we have not made any major progress. Please understand this as a process. As for outside of Japan, it's not something that we do at one time. Depending on each company outside of Japan, they will be moving based upon their own timings. How many people from how many companies in which regions, I cannot say, but they are making progress earlier than Japan. As for your second question about the purpose of the new organization and the time frame, concerning those, we will be doing various reforms. About the organization, the name of the company and human resources, we would like to communicate that earlier than later so that we can move forward. I think we made this announcement at the early timing. When you ask whether we are on track or on schedule, yes, we are proceeding as we expected or as we planned.
Tabata: Just one follow-up about the reduction of the headcount. Could you once again explain the aim or the purpose of that?
Unidentified Company Representative: On the 9th of May, Kusumi-san already explained this. But I think when you consider becoming a sustainable company in 10 years, 20 years, and continue to develop as a company, we think that we need to make the organization leaner and look into the cost. With such determination, we have decided to do this. I hope that answers your question.
Operator: Next is from [inaudible], Sakamoto-san, please.
Unidentified Analyst: Thank you. Sakamoto from [Nikkei]. Earlier, regarding the Panasonic Connect’s new President, you gave us the reason why Mr. Sain was selected in your response to your question to a question by Toyo Keizai. I understand why Mr. Sain, but could you explain the reason why you need to change the leadership?
Unidentified Company Representative: Thank you for your question. It's not in relation to any particular incident or event. It has to do with the term. We feel that leadership needs to change, needs to rotate with a certain period. That is the basic understanding. Higuchi-san has been leading Connect since 2017, leading the reform efforts. As you are aware, he modernized the management from culture to portfolio, the business. He made a great impact to our company, and we are certainly appreciative of that. But it means that he's been with the Company for nine years altogether. While we thank his contribution so far, his achievement so far, we feel that this would be the right time to have a new leader.
Operator: Next, from Asahi Shimbun, [inaudible].
Unidentified Analyst: For each segment, the full-year forecast, the lifestyle part and the income and others, it's about the minus JPY80 billion negative. Could you give us the breakdown of it? Because it's a big number. That's my first question. I see another question on the impact of the US tariffs. With the agreement between US and Japan, the tariffs, including the automotive, is 15%. Without an agreement, of course, it would have been 25%. It's lower than that. With that, your impact from this, would it be smaller? Is that the correct understanding? Talking about this impact, rather than paying for the additional tariff, whether the demand will be impacted from it. What would be the mechanism of the impact of the US tariffs? Those are the two questions that I wanted to ask.
Unidentified Company Representative: First question about lifestyle, the full-year forecast, out of that, and other income, JPY80 billion negative. What is the breakdown of it? There has been any changes. Maybe the ame explanation, but for this fiscal year, we have been conducting the various reforms. Cost restructuring costs are included in lifestyle. The second question, now that the tariff level is 25% to 15%, is the impact from it going to be smaller? Yes, at 15%, the impact will be smaller. How would that actually impact us? There are direct impact and indirect impact. I think that there will be larger direct impact. When we say direct impact, going through the customs and by moving those products, there will be direct tariffs to be imposed. That portion, as I mentioned earlier, if we do not do anything, that will hit our profit and loss numbers directly. But we'd like to make sure that, as we mentioned at the beginning of the fiscal year, we will discuss with customers the price policy so that the customer would pay a certain level of the burden so that we can minimize the impact. That's what we are trying to do. As for the indirect tariff, for example, the US as a whole, the economy is becoming worse. Because of that, the demand for our products is coming down indirectly. Whether the economy struggled because of the tariff or not, it's very difficult to discern. Mainly, we explained the direct impact rather than the indirect impact.
Operator: I'm afraid we are running out of time for the journalist questions. We will only take just one more question from the journalists. [Kuwajima-san from] [inaudible]. It looks like there is a technical problem with our system. [Kuwajima-san]. Please go ahead.
Unidentified Analyst: A related question to the last question regarding the tariff impact. Now that the tariff rate has been agreed to 15%, the impact will be smaller than what you originally expected. As your material indicates, mostly Avionics in Connect and energy, I understand. For energy, for example, production in Japan, example, batteries for EVs. I suppose that export portion is rather limited. I'm wondering if you can make any comments related to that?
Unidentified Company Representative: Thank you for your question. Let me try to respond, especially the impact of tariff on energy business. What is the volume of our business of export from production in Japan to US market? As I explained in my presentation, for the in-vehicle battery and industrial and consumer data center business, these are the businesses that we are in. Production in Japan to be exported to US, for in-vehicle, it's mainly manufactured in the Nevada plant in the US. Therefore, the impact is more in relation to the components and materials. Therefore, not much impact on those that are produced in Japan to be exported to the US. That is as far as the in-vehicle batteries are concerned. For industrial and consumer batteries, the energy storage system, we are manufacturing cells mostly in Japan to be exported to the US. The impact is going to be rather sizable if you just look at industrial and consumer.
Operator: With that, we conclude questions from the journalists. Now, we'd like to take questions from analysts and investors. We are taking questions only in Japanese. From Goldman Sachs Securities, we have Harada-san.
Harada: Yes. Harada speaking from Goldman Sachs. Two questions. The first question is about Blue Yonder. After adjustment and also excluding the ForEx impact, the profit is down. Could you explain the reasons and also the environment of this industry? Second question is about the industry. Here, I think we are seeing better improvements but the content of Gen AI-related is the major driver. Is that right? And [FA] and others are also improving. The structural reform from that perspective, I think that there are some issues with those businesses. Will there be some impact from them?
Unidentified Company Representative: Thank you for your two questions. About Blue Yonder, first of all, as we showed you the numbers, Q1 profit from the year before, there has been a slight decline. Concerning that, the industry, as a whole, I think you asked about that. The industry, as a whole, I think there has been some strength. Our specific reason for us, the strategic investment, especially in the area of security, we mentioned that we are making the investment, and that led to the smaller profit. As for the strategic investment, three years, we will be making steady progress. SaaS cloud-based products, for this fiscal year, we'll be launching many ones. We plan to do so. More recently, for the new launch of the product, we are getting very strong inquiries, and our pipeline is growing. In H2 and onwards, I think that our top-line will recover from it. That's about the Blue Yonder. Second, about the industry. Yes, we are seeing the good improvements, as you commented. There are different reasons. As you mentioned, the generative AI-related device business is growing and pushing our revenue. I think that is the major factor. In relation to FA, we have a site in China. Rather than having a major improvement, we are improving in a steady manner. We are seeing such trend from last year toward this year in FA business. As for electronic, well, it's included in the electronic device business. It's difficult to separate. Not everything is going very well, but automotive-related devices, we continue to struggle since last year. In industry, of course, there are some areas that we need to reform. Since last year, we have recognized that. We don't want to mix everything together. When there are some issues, the businesses with issues, we would like to continue to take initiatives.
Harada: About Blue Yonder, adjusted EBITDA, excluding the strategic investment, it's still negative. Could you explain this further?
Unidentified Company Representative: Well, adjusted EBITDA, excluding last year, there was an acquisition of one network. In Q2, we made that acquisition. In Q1, we did not have that. After the acquisition or through the acquisition, there have been various costs, depreciation costs, and amortization. Aside from the strategic investment, those have been the negative factors based upon the YoY comparison.
Operator: Next, from JPMorgan, [inaudible], please.
Unidentified Analyst: I have two questions as well. First is on energy, the forecast for this fiscal year. You did not revise your forecast. What will be the nuance of the background? There is a slight downturn risk for in-vehicle. Currently, you assume that, that could be made up for with data center business. Or is it that because you're still verifying the impact on in-vehicle, you did not revise the forecast, which is it? Also, in relation to the data center applications, I think maybe it was 1.5x. But for H2, it looks like you are keeping that forecast. But if it's doing better, what is the upside is my question. Another question is in relation to the tariff impact. You said less than 1% on the annual basis, are you talking about the growth amount? Or are you talking about within 1%, including the effect of the countermeasures? For Q1, the impact was negative JPY5.8 billion. Is that on a gross basis? That is my last question.
Unidentified Company Representative: Regarding the energy forecast. In-vehicle is trending downward, while data center energy storage business is on the upward trend, as I mentioned earlier. What we did not clearly state in our presentation is whether those are going to offset each other? Or is it that we are taking much time trying to figure out the situation? The answer would be the latter. In other words, we're not still clear as for what the impact is going to be. Of course, there's always the offsetting nature in our businesses. If one business is doing better, the other would be covered by that. The state of sense of balance is very important. For example, the termination of the 30D IRA tax credit was only announced this month. We have yet to really analyze what the impact is going to be. As for data center review, you said that 1.5x has not been updated or is not reflected. Here, again, we're still looking at the details. We can't say exactly the scope of the increase at this point in time. But as I said, the order inquiry is much larger than what we had anticipated at the beginning of the year, but we're trying to quantify exactly how much. As for the tariff impact, gross or net is your question. The answer is it's on a net basis. Gross calculations, if we just multiply by the tariff rate, then we can give you the answer immediately. In addition to that, we have to take actions to make a recovery. We feel that all those need to be clarified before we can give you an explanation. Therefore, we are trying to speak on a net basis, which includes the recovery effect as the full-year forecast. That is true for JPY5.8 billion for Q1 as well.
Operator: Next, from SMBC Nikko, Katsura-san.
Katsura: This is Katsura speaking. I have two questions. First is about Connect, the project business. A joint venture started in April, but it was terminated. Once again, what are you going to do about this business? What are your views as of now? That's my first question. As for the numbers, the technical sales is JPY65 billion, and then it came back. After the adjustment, it hasn't changed. It's down to zero, and the JPY50 billion, the gain on sale was excluded. I think that's how it is explained. From including the organizational change of the Panasonic Corporation, should we understand the positioning of this business? After this making announcement, it was terminated. Maybe it has to do with the conditions with ORIX. The reason why you made this decision, I'd like to know the reasons. The second question is about energy. On slide 13, I think, earlier, I think that the review has not been changed, and the automotive hasn't changed. It's unchanged. But as an understanding of the environment compared to three months ago, in terms of magnitude, how do you see the environment right now? I think they are positive and negative. The performance of the Q1, or you can talk about in comparison to the expectation, and I'm sure it's difficult to talk about the full year, but if you can talk about Q1.
Unidentified Company Representative: Okay. The first question about the projector business deal, why did we end this or terminate this? It was a very difficult decision to make. As for the background, last fiscal year in H1, we made this deal, and we reached an agreement, and we made an announcement to you. That was the beginning. Then, after that, spending six months, finally, we decided to terminate this. During the six months, what were the changes that we saw? Overall, market conditions quickly deteriorated. Because of this, the project business last year in H1, compared to that, I think that the business environment and the performance expectation became very tough. In the project business, we do have a big business in North America, and there has been an impact from the tariff, and there have been a lot of quick changes. This was a headwind for this project. Of course, it is not as simple as terminating the deal because of the changes in the environment. To what extent was the environmental reason, to what extent was our own reasons. If we talk about the details, it will be very difficult to separate those two. But of course, that with our partner, there were some differences of the views, and we had a thorough discussion with them. But as I said, who is responsible for how much, it's difficult to draw the line quantitatively. The negotiation of the deal, to linger it, of course, from April, the project people were determined to start this business. Rather than continuing with this discussion, we wanted to make a decision so that we can move forward as a company. That's why it was a very difficult decision for us to make. As a segment in Connect, we made a revision to the impact that we expected at the beginning of the fiscal year. Second question, including page 13, the EV battery, and including the performance of the Q1, there are several things. As I explained earlier, compared with our expectations, the recent trend, our forecast of the sales have softened or weakened somewhat. Based upon the Q1 results, we do disclose that, and we are showing that on this page. 10.1 gigawatt was the production sales in Q1. Compared with the year before, 1.4 gigawatt higher in revenue and in profit. This 10.1 gigawatt level, the start-up of the Kansas, if it starts up steadily, then the 46 gigawatt hour was not difficult, but we needed to make a modification to that. What would be the size of the modification? We are currently scrutinizing that. We are not showing the numbers right now. The volume will be higher than the year before. That will be within what we expected. The FY2025 graph, if you look at that graph or line, our strategic partners, their car sales were stagnant last fiscal year. Each quarter, we try to increase the production and sales position, and we achieved that. As we explained since the past, the total demand of the vehicle rather than that, we wanted to manufacture and sell those products locally, and that was highly valuated from our customer, and our share increased. I think that there has been a little gap between the vehicle side and also our product side. A comparative advantage that we have, the IRA 30D is going to be terminated, but the 45X will continue. This is a major thing for the local production manufacturer. In addition, Kansas, the mass production it's 2170, it's the same cell, and we have a higher capacity. As I mentioned, it's 5% higher. Technology is more evolved. Those are the cells that we manufacture in Kansas, and we are getting a very strong inquiry from the customers to provide the cells early. Of course, tour customers need to evolve their cars. As a partner, we are cooperating to start up Kansas. Having the continuous incentives and also our technology and capacity being accepted, we are getting a strong inquiry. It will be slower than what we expected originally, but the volume will be higher than the year before. That's the current understanding of the recent movement.
Operator: We are getting close to the end time. We will only take two more questions, one each from two people. Nakane-san from Mizuho, please.
Nakane: One question. Okay. Connect. Mr. Sain is going to be the new President. He's from Avionics and not Blue Yonder, Gemba Solution. It looks like they are very far. Including the plan to list the Blue Yonder share, should we assume that everything, all the strategies, would be considered from scratch? In other words, without any prior notice? Also, next year, in April, he is going to be the President. Would there be any chance for us to meet him in advance?
Unidentified Company Representative: Thank you for your question. Yes, Connect will be headed by a new person. Would there be any changes to the policy and strategy of Blue Yonder? No, we're not going to change the Blue Yonder strategy. The Company under the new leadership is going to continue with the conventional policy on Blue Yonder. Now, before next April, would there be any opportunity for you to meet Mr. Sain? Well, we are making this announcement rather early on. We would like to make sure that there is sufficient preparation ramp-up being made before April. All this preparation would proceed.
Operator: Last question. From Citigroup Global Markets, we have Ezawa-san.
Ezawa: This is Ezawa speaking. One question. About projector-related and also the management as a whole, I'd like to hear from Waniko-san. Now, projector, at the very end, I think this was a major matter because you were unable to sell this. Structural reform is something that you have been working on, and you're proceeding with it. In relation to that, maybe selling this business, even at loss, would have been better as a third party. What are you focused upon as a management team? Is it changing slightly? Looking at the business performance this time, Blue Yonder, the performance is not very good. Higuchi-san, who have been leading, is now going to resign. The batteries, I think there has been some activities, good and bad. The consolidated guidance remains the same as of now. It seems that the quality of the management is being questioned, frankly speaking. Aside from the short-term results, the improvement of the management structure and the enhancement, if you can mention something, some changes that you can expect, or some views or plans, something that you can talk about now?
Unidentified Company Representative: About the projector, this is something that we have been working on. At the very end, it was terminated. Of course, we have to make the overall group reform, and we are not doing as we mentioned. We are not changing our attitude at all. As a result, this project business was terminated. This was, again, as I said, an extremely difficult decision for me. To explain each detail of the background, of course, that's not suitable for us to do because there is a partner. The situation was becoming worse, and it was not an easy decision for us. Once again, you mentioned that we should probably consider the lower price. We actually repeated the negotiations many times. In our Board meeting, we did discuss this. At the very end, we had to make a decision and what do we choose? As I said, those employees who were willing to work, we wanted to make sure that they can move forward, and we needed to make a decision for that. The quality of the management is changing, maybe you had such image. That is not the case, and we are working on this reform for this fiscal year, and we will continue to do so. Thank you very much.
Operator: Thank you very much. With this, we conclude the earnings briefing for Q1 of the fiscal year ending March 2026. Thank you very much for your participation.