Hirokazu Umeda: Thank you very much. Let me now start the presentation on the business results, as well as forecast. First, this is a summary slide. In FY 2021, the results exceeded the revised forecast presented at the Q3 results announcement. Despite lower overall sales due to COVID-19 impact, along with the deconsolidation impact in business portfolio reform, adjusted operating profit increased with steady progress in enhancement of the management structure and contributions from increased sales of businesses, capturing opportunities of changes in society.

In Q1, both sales and profit were down. Q2 turned to an increase in profit and second half achieved increases in both sales and profit. Operating profit and net profit decreased due mainly to impact of onetime gains in other income and loss in FY 2020. Free cash flow significantly improved, due mainly to business transfer and sales of assets, along with operating cash flow. Net cash turned positive, even when including these liabilities.

As for the consolidated financial forecast for FY 2022 both sales and profit are expected to increase with economic recovery in various countries and continuous initiatives in management structure enhancement. Profit is expected to increase in all segments. In the final year of the midterm strategy, Panasonic will steadily promote initiatives to overcome the low profitability structure and strengthen efforts to capture business opportunities for mid to long-term perspective, based on our capital allocation policy. Next let me explain the details. This shows consolidated financial results.

Overall sales decreased to JPY 6,698.8 billion due to COVID-19 impact along with deconsolidation impact in business portfolio reform. Adjusted operating profit increased due to enhancement of management structure and contributions from increased sales of businesses, capturing opportunities of change in society. Operating profit and net profit decreased due mainly to impact of onetime gains in other income and loss in FY 2020. This is the sales analysis. Overall sales decreased by JPY 791.8 billion, down 11%.

Sales in real terms, excluding such impacts of deconsolidation, decreased by JPY 390.2 billion, 5% due to COVID-19, mainly in Connected Solutions, while sales increased in such businesses as Home Appliances. Next is the operating profit analysis. Regarding management structure enhancements set in the medium term strategy, we made profit contributions of JPY 60 billion with fixed cost reduction and JPY 30 billion with measures to businesses with loss-making structures. In addition, the effect from businesses with higher sales such as Home Appliances contributed to overall profit growth of by JPY 49.2 billion. On the other hand, negative COVID-19 impact was JPY 135 billion in FY 2021.

Adjusted operating profit increased by JPY 20.5 billion. Overall, operating profit decreased by JPY 35.2 billion, due mainly to lower other income and loss impacted by gains from business transfer in FY 2020. This shows adjusted operating profit analysis by business. Full year profit increased by JPY 98.4 billion, with businesses capturing opportunities of changes in society from mid to long-term perspective. These positive factors contributed to higher company-wide profit, offsetting the decrease in Avionics business, which was largely impacted by COVID-19.

In particular, profit increase in air-conditioning, indoor air quality, Home Appliances and Automotive Batteries. Also profit increased in systems, devices of industrial solution and process automation. Next is, the trends in our sales. Upper graph shows sales in real terms compared to FY 2020, the lower graph shows adjusted operating profit. In Q1, sales and profit decreased significantly, mainly in automotive and connected solutions due to COVID-19.

In Q2, company-wide profit turned to an increase, due to recovered sales, mainly in Automotive and Appliances. In the second half, increases in both sales and profit were achieved company-wide, with Appliances, Industrial Solutions and Automotive exceeding the level of FY 2020. In FY 2021, sales decreased in the first half due to COVID-19, but in the second half it exceeded the level of FY 2020 and continued on the recovery trend. Next is, our results by segment. Adjusted operating profit achieved profitability in all segments for the full year, after turning profitable in all segments in Q3.

I will explain the details in the next slide. This show sales and profit analysis by segment. In Appliances, sales decreased overall significantly affected by lower sales of smart life network due to the impact of streamlined product lines, while stable sales continued for our Home Appliances. Profit increased due to higher sales of Home Appliances along with cost control efforts in each business. In Life Solutions both sales and profit decreased.

This is due to the impact of market deterioration, as well as deconsolidation of housing business. While sales of air quality related to businesses were favorable and thorough efforts to reduce fixed costs were made. In Connected Solutions, sales and profit significantly decreased, but achieved profitability for the full year. Strong sales of mounting machines reflecting 5G-related demand could not offset the decreased sales of Avionics business. In Automotive, sales decreased.

Recovered sales from Q2 onward could not offset the significant impact of reduced production of automobiles mainly in Q1. Profit increased due mainly to reduce fixed cost and material rationalization, despite the impact of decreased sales and temporary expenses. In Automotive Solutions, overall profitability was achieved for the full year after turning profitable in Q2. In Industrial Solutions, sales decreased due mainly to the impact from transfer of semiconductor business, while sales of products for data centers and FA usage were favorable along with automotive use products shown the recovery in the second half. Profit increased due mainly to increased sales including capacitors, power storage system and industrial use motors, along with the effect of structural reform of the semiconductor business and other factors.

Next is the free cash flow and cash position. We generated over JPY 600 billion free cash flow mainly through transfer of business and sale of assets, in addition to operating cash flow. The graph on the right describes the cash positions. Gross cash and net cash largely improved through free cash flow generation. Net cash turned positive even when including these liabilities.

Now let me explain the consolidated financial forecast for FY '22. This slide shows the consolidated financial forecast for FY '22 both sales and profit are expected to increase due to economic recovery in various countries and increased sales of businesses capturing opportunities reflecting changes in society and continued initiatives in management structure enhancement. Sales is expected to increase by JPY 301.2 billion to JPY 7,000 billion adjusted operating profit is expected to increase by JPY 82.8 billion to JPY 390 billion. Operating profit is expected to increase to JPY 330 billion. Net profit expected to increase to JPY 210 billion.

ROE is expected at around 8%. So, this is our analysis of the FY '20 two operating profit forecast. Adjusted operating profit is expected to increase by JPY 82.8 billion of which JPY 70 billion is expected from the effect of increased sales including Automotive Solutions and system devices. We expect JPY 20 billion of contributions to increased profit from management structure enhancement set and midterm strategy. Considering current circumstances, we anticipate various risks such as price hikes for raw materials.

We'll make efforts to offset negative effects through management structure enhancement and rationalization. Other income loss is expected to decrease by JPY 11.4 billion. This is mainly from the impact of onetime gain in FY, 2021. Accordingly operating profit is expected to increase by JPY 71.4 billion. Forecast by segments are shown on the slide.

Sales of Appliances is expected to remain at the previous year's levels, while sales of all other segments are expected to increase. Profit is expected to increase in all segments. Profit is expected to continue increasing in Appliances, Automotive and Industrial Solutions. Profit is expected to turn to an increase in Life Solutions and Connected Solutions in FY '22 after decreased profits in FY 2021. This slide shows our FY '22 forecast by segment.

Appliances is expected to remain at the previous year's level due to slow demand recovery in Japan related to Commercial Refrigeration & Food Equipment, while growth is expected in areas such as air conditioning. Profit is expected to increase with increased sales of stable businesses and management structure enhancement, despite the impact of raw material price hike. In Life Solutions, sales and profit are expected to increase with growth in overseas wiring devices air quality and housing businesses along with rationalization efforts. In Connected Solutions, sales and profit are expected to increase with growth expected in businesses as Panasonic System Solutions, Japan and thorough efforts to control fixed costs. In Avionics, decreased demand is expected to persist but with some recovery from FY 2021 level.

In Automotive, sales and profits are expected to increase, due mainly to recovery of the automobile market, starting operation of the new products and life for cylindrical batteries in North America management structure enhancement and material rationalization. In Industrial Solutions, sales and profit are expected to increase with increased sales of automotive used products and multilayer circuit board materials and others, as well as fixed cost reduction measures. Now the midterm strategy. During the current midterm strategy started in FY 2020 with the aim to overcome our low profitability structure, we have made safe progress in promoting business portfolio reform along with management structure enhancement. As in this slide, we expect to improve profitability in FY 2022, following 2021, even with exchange – even with changes in the management environment.

In the final year of the midterm strategy, we will continue to promote our efforts in these key initiatives, aiming for further improvement of profitability. Details will be explained in the next slide. In terms of management structure enhancements set in midterm strategy, we made significant progress in fixed cost reductions, achieving the midterm target of JPY100 billion in FY 2021, ahead of schedule. In addition, we will aim for further profit contributions of JPY20 billion in FY 2022. In terms of taking measures to businesses with loss-making structures, we already set the directions for semiconductor, LCD panel and solar businesses.

TV business has turned profitable in FY 2021. We are working on reorganization manufacturing sites and we are in negotiations toward comprehensive collaborations with external partners. In business portfolio reform, we have reached an agreement to acquire all shares of Blue Yonder, a global leader, specialized in supply chain software as an investment for growth. In Automotive Battery business, we are making steady progress in increasing production capacity to improve profitability. We made decisions including share transfers of our lighting device business in Europe and North America.

We are promoting portfolio reform in individual businesses from the perspectives of region and product. In terms of profitability improvement of the Automotive business, this segment turned profitable in FY 2021 after a loss of JPY 0.5 billion in FY 2020. In FY 2022, JPY50 billion of profit is expected. Profitability has been significantly improved through fixed cost reduction, improved productivity, material rationalization and other measures. Next I will explain our midterm capital allocation policy.

In the current midterm strategy, which started in FY 2020, we carried out capital allocation activities based on our policy to allocate necessary cash with cash flow generated from business. However to capture growth opportunities, we respond flexibly when investment opportunities arise, before sufficient cash flow is generated from business. Panasonic recently announced the acquisition of all shares of Blue Yonder. This is indeed an example of capturing a growth opportunity, total acquisition value is expected to be approximately JPY750 billion, large-scale investment. However, the framework of our capital allocation policy remains unchanged.

The details of cash flow generation and allocation are

as follows: cash flow generation allocation for the two years for FY 2020 and FY 2021 are shown up left of this slide. Cash flow generation was a total of approximately JPY2.2 trillion including reduced lease liabilities from portfolio optimization. On the other hand, cash flow allocation was a total of approximately JPY1.2 trillion including investments dividends restructuring expenses and others. As a result, we have approximately JPY1 trillion of sales funds after using the necessary capital for investment and others. The forecast for FY 2022 is shown on the right.

The acquisition of Blue Yonder will be made within the framework of our capital allocation and complementary capital with such means as hybrid financing. With regards to investment, we will execute in a well focused manner according to business conditions, such as capturing growth opportunities. At the same time, we will continue to promote cash flow generation. Finally, Panasonic's initiatives toward growth from mid- to long-term perspective triggered by COVID-19 change in society are accelerating in various business areas. The reason that for Panasonic is to offer solutions to social issues through its business activities under such circumstances.

In the left-hand top the area of lifestyle and Appliances and Life Solutions, in response to increasing demand, such as air conditioning and indoor air quality. We are strongly communicating the value of our core devices in particular nanoe and Gi-eno [ph]. We aim for further penetration of the related products through deeper understanding of our technological capabilities and value among consumers. With regard to the right-hand side, the Gemba process and connected solutions, we are facing a number of issues in the area of supply chain such as extreme fluctuation in demand caused by COVID-19 and greater burdens on logistics. Panasonic aims to accelerate its growth strategy together with Blue Yonder and offer solutions to our customers' management issues.

At the same time, we will strengthen our own operational capabilities as well as contribute towards a sustainable society through reduction of energy consumption and using resources efficiently. In the area of fine processing to respond to expanding demand of ICT-related equipment, we will continue to expand production capacity as well as introduction of new models of mounting machines. In the left bottom in the area of Automotive Batteries in Automotive to respond to the expanding EV demand related to climate change and to contribute to a sustainable society. We will continue to expand production capacity in North America factory and maximize use of Japan factory. On the right-hand side bottom in the area of devices in Industrial Solutions, we will particularly focus on three core businesses, which we regard as high-growth areas such as case in the automotive industry, information and communication infrastructure, and labor-saving ad factories.

We will make preparations for the future and expand our investment. With the initiatives mentioned, we will continue to strengthen our businesses by thoroughly enhancing competitiveness and concentrate management resources on areas where we should focus on. This slide shows our plan schedule for IR activities in FY 2022 and FY 2023. On May 27, we will host the CEO briefing. In October 2021, our current company system will transition to a virtual structure based on the new organization.

Therefore, we plan to disclose financial results based on the new reportable segments from the FY 2022 Q3 announcement. As for other IR events, we will host briefings on individual businesses and ESG-related topics. In April 2022, we will transition to the holding company system. Following this around May 2022, we plan to announce our medium to long-term strategy under the new structure. Then we plan to host an IR day and present detailed strategies on how each operating company will strive to become specialized in shares.

Thank you very much for your kind attention.

Operator: Thank you, Mr. Umeda. Now we take questions. Mr.

Katsura from SMBC Nikko Securities.

Ryosuke Katsura: Can you hear me? This is Katsura speaking.

Hirokazu Umeda: Yes.

Ryosuke Katsura: Thank you. Two questions please.

First on slide 18. Cash allocation is explained for the fiscal 2021 in Q4, I think the appendix five of your presentation, JPY194.8 billion that is quite big positive and the sale of the assets. What were the major ones? Also on page 18 on the right-hand side, cash flow generation from the business and the asset sales, in terms of the size, what are the expected cash flow generation? If you can share with us some details. My second question is on slide 13. There is a profit -- operating profit analysis.

The rationalization and raw material price hikes. The offsetting, the raw material price hikes with the rationalization; I think this is a net number. So what were the gross forecast or expectation? The background of the question is that in 2016 or 2017, the raw material price hikes, hundreds of billions were incurred. So could you tell us what is the current status?

Hirokazu Umeda: Thank you for your questions. First, about the free cash flow.

The investment cash flow is usually negative, but here this is the major positive figure. There are two major types; one is the portfolio replacement. And because of this the cash in was recorded. And also, for the gross holding of the shares for the policy purposes, we always review this. So that was also reviewed.

So, as for the individual names, I cannot disclose this at this moment but that's the breakdown of the cash flow allocation. 2022 -- fiscal 2022, the operating cash flow and the basis of the free cash flow. The fiscal 2021 that is the double of the net income or more is usually the level of the free cash flow. So, exceeding that level that comes from the replacement and so forth. As for 2022 the free cash flow, now, the double of the net income or net profit were exceeding that level.

That is the free cash flow level that we expect asset replacement and so forth. I cannot make any additional comments. But usually that is the situation that we have. So, that's my answer to your first question. In FY 2022 operating profit analysis, it is true that the rationalization in raw materials minus JPY1.2 million is shown here.

As you know the raw material prices are at a very high level. Copper for example we use a lot of copper the copper price in futures $10,000 per ton that is the current level. And the impact from that is actually more than JPY50 billion that is already incorporated. And through the rationalization and also other management efforts, we can almost offset that and that is included here.

Ryosuke Katsura: That’s all.

Thank you very much for your answers.

Hirokazu Umeda: Thank you very much.

Operator: Let's go to our next question. From Citigroup Securities is Ezawa please.

Kota Ezawa: This is Ezawa from Citigroup Securities.

Hirokazu Umeda: We hear you very clear.

Kota Ezawa: I have two questions. I am referring to page 14 for the slide. This is the by segment forecast. And it is about CNS and it is related to the financial result.

In Q4 for financial result, the other income and losses, it was around 22 -- minus JPY22.4 billion. I would like to know the contents of this negative. And in Q4, about JPY22.4 billion is already there. There is minus JPY1.2 billion of negative as we further minus for the other income and losses. Why is it occurring? That's my first question.

Second is about Automotive Business. In the new fiscal year for the other plan, you said that you're going to be creating JPY50 billion for profit. However, it is utilizing half of your profit. And so why is it that it is becoming the half of what you're going to be creating? And for the joint venture, for the prismatic battery, what is going to be the impact based on the consolidated profit? And how is it going to be impacting your financial result because it is also run on equity-based method?

Hirokazu Umeda: Thank you very much for your questions. Of Q4 for CNS and for other income and loss, it is JPY 22 billion recorded.

This is coming from the Avionics businesses. The demand for Avionics beyond border is a slow-end resumption. Regarding Avionics business itself, we have been working on various merger and acquisition to grow the business. And the goodwill impairment has happened temporarily. That is coming from CNS in Q4 and was incurred in the size of JPY 22 billion for others income and loss.

That is the answer for the first question. And for second question, so you mentioned, why we have already set the directions. And regarding ITC global, which was already announced, the actual deal is going to be finished at the end of April. Therefore financial result is going to come in fiscal year 2023. So I would like you to understand in that level.

So that was related to CNS. And the second issue about Automotive and for other income and loss, you said there is still JPY 22 billion. And we have been mentioning from the past that, the prismatic battery business is still under the investment phase because of that. The equity method portion is including this part. Currently, we are now making investment for capital production increase.

Therefore, we're going to be having to wait in order to harvest the result. And this is included now in the others and increase in loss. I would like you to understand in that way.

Kota Ezawa: That is all from my side.

Hirokazu Umeda: Is that okay? Is that okay?

Kota Ezawa: Thank you very much.

Operator: From Nomura Securities, we have Mr. Okazaki.

Yu Okazaki: This is Okazaki of Nomura Securities. Can you hear me?

Hirokazu Umeda: Yes.

Yu Okazaki: Thank you.

First question is about your concept on cost. The SG&A trend, if you look at the quarterly trend in Q4, Q-on-Q and Y-on-Y cost is increasing. January to March, there were one off items. Is that the case? I'd like to clarify. And also, fiscal 2022, the SG&A and cost, what are your views? My second question is on -- you are enhancing the management structure.

And I have a question on that. And because of the pandemic and also there are some measures that you have taken, even before the pandemic. And now, that you'll be handing your responsibility to the next management team? And for Mr. Tsuga what was the level of the achievement at the end of year term? And what are your expectations for the next CEO and the President?

Hirokazu Umeda: As for the SG&A, there is a seasonality. And we usually look at it annually.

In addition, in comparison to the previous year, last year there was some impact from COVID-19. But this year we have done well. So SG&A, or preparing for SG&A, that is an increase. And that is how you can understand this.

Yu Okazaki: And there are any other one-time additional SG&A items?

Kazuhiro Tsuga: Thank you for your question.

Let me answer your question on the enhancement of the management structure. FY 2021, if you look at the full year, we made progress in terms of the enhancement of management structure that is reflected in numbers. And that is a fact, especially in the first half. Under the pandemic, we needed to think about what we could do and fixed cost reduction deferral, the fixed cost reduction was what we did. And then after that, sales started to increase and of course continuing the fixed cost reduction.

And also, as the demand was expanding, we needed to deal with it. So, we need to work on both. And that's how we have proceeded. So, in that sense the enhancement of the management structure -- the numerical targets, we have of course achieved them and we have exceeded them as Mr. Umeda said.

So, can we do more, or is this type of reduction reasonable? We have to really think about the management structure and that is one of the challenges that we have. So, FY '22 under new CEO, Mr. Kusumi that is something that, I hope he will work on. Thank you.

Operator: Let us go to the next question.

From JPMorgan Securities, Ayada please.

Junya Ayada: This is Ayada from JPMorgan Securities. Thank you very much for taking my question. I have two questions. One is on Page 14 on the slide, regarding the adjusted operating profit of Automotive.

And I would like to know the details compared to the previous year, the Automotive devices and battery which is going to be making the bigger contribution? It is okay qualitatively actively. So, if there should be anything that you can share, I would like to know? And on a related note, on the Page 19 of the slide, regarding the -- there's a comment about 4680. I would like to know more details within the timeline. Is there going to be a bigger decision made in this fiscal year? So, if you can add any information I would love to hear. And so, my second question is about what Mr.

Umeda mentioned for free cash flow forecast. For net profit, Mr. Umeda mentioned double the net profit. And he mentioned about the cruise speed and the significant and the meaning of cruising speed it is going to be JPY 400 billion size of free cash flow or does he mean by the comparison with the previous year. So, I would like him to be elaborating on the issue please?

Hirokazu Umeda: Thank you for the question.

First of all, with the differences for JPY 47.8 billion increase for profit, 80% comes from the automotive solutions. And for Automotive Batteries is around a profit increase of 20%, so that is the range of the increase regarding the Automotive Batteries improvement of the profit, there could be some voices about the profit increase is small. But for the Cylindrical Automotive Batteries right now, we are under the development for 4680 and other development. And of course, we are going to be increasing our profit. However, this could be synchronizing with the strategic development and the profit increase seems to be looking small.

Regarding Automotive businesses the profit at last for infotainment and/are seeing the profit at last. But therefore, we are expecting large profit growth. So regarding 4680 and the prototype line, we call this -- so we do not have any product yet. Therefore, this is in line based on R&D. We are going to be installing this prototype line to look into the capacity increase and we are going to be making the validation and testing.

During this fiscal year, whether or not we're going to be making decisions or not. It's not something that we are expecting currently, we're still in the stage of the R&D level and we are still under verification. Please understand like that. Regarding the cash flow. Maybe double the net profit is too much.

So the net profit is going to be going around JPY210 billion. So it is not actually going to be double but then it is going to be higher than the previous fiscal year. So I would like you to understand it that way. Is that okay?

Junya Ayada: Excuse me, the confirmation. So the free cash flow of this fiscal year, you say it's going to be going and last year it was about JPY680 billion but you're not talking about that.

So the free cash flow is going to be higher than what it used to be is that so?

Hirokazu Umeda: For this fiscal year, so the double of net profit is the normal situation. So the remainder comes from the restructuring of the portfolio and temporary gain. And for next fiscal year, it is qualitative way of saying but the cruise speeding for the net profit more than double is going to be our free cash flow. So that is the speed that we are expecting. Thank you very much Junya.

Junya Ayada: Thank you very much.

Operator: Mr. Nakane of Mizuho Securities.
Nakane-san: This is Nakane of Mizuho Securities. Can you hear me?

Hirokazu Umeda: Yes.

Nakane-san: Two questions. One for Mr. Umeda, and another for Mr. Tsuga. But the business results as well as forecast in Appliance I have a question.

Last year due to the pandemic, the demand went down and then has strengthened. And that continues. For this fiscal year, what are the assumptions? And that's very difficult to come up with in Japan, in China and also Home Appliance, white goods, air conditioning and TVs. Those major products, the environment of the demand, do you think that this kind of special demand, or are you conservative in the second half? What are your strategies? Could you talk about those? The second question is to Mr. Tsuga.

Thank you very much for your service for a long time. I think you talked about visualization quite a bit in the past. So as a top management organization, decision-making, cultural, what are the biggest difficulties that you faced? And how did you resolve them to make improvements? And are there any additional issues or challenges? The reason why I'm asking is that if you look at Panasonic from outside. I think it's more visible now but with the case of Blue Yonder, the decision-making process is not very clear to us, frankly speaking. So as a top management, what are your views? And how did you manage to make changes? So those are the two questions.

Hirokazu Umeda: Thank you. So to your first question, FY 2022, Page 14, in terms of sales, if you look at the sales numbers, Appliances, the difference is JPY10 billion. But here it says down by JPY11.9 billion. So that means that there is a strong tailwind that was in FY 2022 – FY 2021. But in FY 2022, I'd like to make sure that we will reflect them to the product development such as nanoe and we'd like to maintain that.

So that's the kind of level that we have about the sales. And the major one is Japan and China, in terms of the region. As for the assumptions. In the case of Appliances, the strong demand is a tailwind. But at the same time, the raw material prices are increasing.

And that is a major impact on Appliances. So on Page 23, appendix, Appliance-related details are explained and the raw material price hike. We want to make sure that we can provide a high value-added product and sell those products to customers. And by doing so aside from the sales, we would like to control the cost as well as the material cost in terms of adjusted operating profit and that is the plan's assumptions for fiscal 2022.

Kazuhiro Tsuga: Thank you.

Concerning your second question. Yes, I have been working as a President for a long time and I started with visualization. And to some extent, we have made progress. But as you pointed out, decision-making process what is the process and what is the logic? Maybe those are not very easy to understand from outsiders. The major decision-making, which requires major investments, or is this something that we are challenging something totally new.

If the conventional business for the improvement of that or growth of the existing businesses for that maybe our decision-making is not so difficult to understand. But in the case of, for example, Gigafactory in Nevada, what is the speed of starting up our plant? That has to do with the operational capability. And unless we have a good forecast of that. We cannot really see that clearly. But in the past, what are the areas that we can do this and manufacturing the batteries supplying from them is something that we have done.

But with the partner such as Tesla we cannot just move forward with only our way of doing. We needed to make a big jump, and by doing so of course we will face problems and difficulties but after going through this for several years, finally in North America now we are able to manufacture batteries that could give us confidence and experiences. And I think that is the fact. And as for the Gemba Process Innovation, generating businesses from Gemba Process with the trials and errors and we had various trials. For example, China, in hetero [ph], we’re working with them.

We tried many things. And in Gemba Process Innovation what can we provide in that area? And in the long-term, what would lead to the new business domain what should we be doing? And gradually we started to see that. And that is how we encountered Blue Yonder and 20% investment was made. And there were things that we understood and did not understand. So unless you make a big jump and move forward, it's difficult to gradually start to see that.

So that's probably one of the reasons that you have difficulty understanding our decision-making process. But there are things that are feasible and not visible but that's a very important information. So, we'd like to make sure that we have a good communication. And at the same time, challenge ourselves for something that are important and necessary. So, with the new CEO we would like to continue to be a challenging company or company that would challenge new things.

I hope that answers your question. Thank you.

Operator: Now, our time is reaching to the end. So, we would like to end our question with this question and we'd like to limit the question with only one. [Operator Instructions] Mr.

Hirakawa-san [ph] from BOE Securities please.

Unidentified Analyst: Hirakawa from BOE Securities. Thank you very much. And it is just about the structural reform in FY 2023 March, this is going to be the last year of the entrancing management structure and the midterm strategy. And there's going to be JPY60 billion for expenses that you forecast and regarding avionics there are several businesses that are struggling.

And from the March of FY 2023, the adjusted operating profit and operating profit shall we come back to the same level as previous. And we would like to increase our thinking on the numbers. Therefore, I would like to know about the effect and the outline of the -- your measures please.

Hirokazu Umeda: For other income and loss JPY60 billion. What is included in the JPY60 billion is the expense for structural reform and the profit and loss for the equity method is included.

Therefore FY 2021, structural reform expense have been beyond our schedule slightly including the avionics. So, therefore, it is about JPY59 billion. And you mentioned about the FY 2022 JPY 60billion. Out of that JPY40 billion is the expense registered for the structural reform. In the midterm strategy for the low profitable businesses and we're going to be remediating the businesses making low profit.

And we have allocations for the quality and the litigation expenses globally happening. Therefore, around JPY 20 billion to JPY30 billion, it is going to be going to be recognized as a loss. That is our assumption. So, businesses are always circulating. Therefore, we need to take measures early stage.

And by doing so we would like to lead it to the improvement of the business with a sense of speed. And after FY 2023, our business is going to be specialized and is going to be sharpened. Therefore, the adjusted operating profit and the difference with the operating profit that you mentioned JPY20 billion to JPY30 billion is going to be happening normally. And for other expenses for the structural reform, we need to minimize as much as possible. And this is what we are going to be working for the three years.

Thank you very much.

Unidentified Analyst: Thank you very much.

Operator: So now we have reached a time. Therefore, we would like to close our… [Abrupt End]