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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Thank you very much for participating in the Sumitomo Chemical conference call for fiscal 2019 Second Quarter Financial Results.
First, Sumitomo Chemical's Director and Senior Managing Executive Officer, Mr. Shigemori will give a briefing on fiscal 2019 second quarter financial results. And later, he will be joined by Mr. Sasaki, the Executive Officer, to take questions.
Before we begin the conference, let me give you some reminders. In the briefing, future projections based on current forecast may be provided. But please be informed that they involve risk and uncertainty. We ask that you be aware that sometimes the actual results may differ greatly from projections.
[Foreign Language] conference call. Mr. Shigemori, please.
Thank you very much indeed for joining us for our conference call today. To our investors and to the analysts, I'd like to express my gratitude for your understanding and your support, as always. I am very grateful.
Now I would like to start my briefing on 2019 Second Quarter Financial Results. Please go to Page 4 of the material.
Fiscal 2019 second quarter consolidated results. Sales revenue, JPY 1,107.7 billion (sic) [ JPY 1,107.6 billion ] down JPY 14.6 billion year-on-year. Core operating income was JPY 84.5 billion, down JPY 17.6 billion year-on-year.
Nonrecurring items not included in core operating income. In terms of losses, there was an impairment loss of JPY 19.3 billion. There was also a business structure improvement expenses of JPY 3.4 billion recorded.
On the gain side, changes in fair value of contingent consideration, JPY 41.8 billion was recorded. So on a net basis, it was a gain of JPY 18 billion.
In terms of year-on-year change, there was an improvement by JPY 28.2 billion. Now impairment loss, changes in fair value of contingent consideration. This is due to in Pharmaceuticals in the cancer area, there was a review of the business plan, including the development plan.
Intangibles work-in-progress R&D. Impairment loss was recorded, but at the same time, liabilities of future payments, the so-called milestone payments, its fair value declined. So there was the reversal of expenses. And as a result, operating income was JPY 102.5 billion, which was up by JPY 10.6 billion year-on-year. Finance income and expenses was a loss of JPY 5.9 billion, which was down JPY 16.3 billion year-on-year, a deterioration by JPY 16.3 billion. Gain and loss of foreign currency transaction due to yen appreciation, there was a loss of JPY 6.8 billion. It was worse by JPY 17.1 billion year-on-year.
Corporate tax expenses was at JPY 46.6 billion compared to the year before, it was higher by JPY 25.8 billion. Some major factors include in the Pharmaceutical area, there was a review of business plan, and there was a drawdown of deferred tax assets recognized in the United States.
As a result, net income attributable to owners of parent was JPY 29.7 billion, down JPY 31.8 billion year-on-year.
Now changes in fair value of contingent consideration in Pharmaceuticals, impairment loss drawdown of deferred tax assets, almost cancel each other out. So the decline in net income is driven by primarily decline in core operating income as well as deterioration of gain and loss of foreign currency transactions.
Now exchange rate and feedstock naphtha prices, which have an impact on our results. Average rate was JPY 108.6 to the dollar. And naphtha price average was JPY 42,700 per kiloliter. So it was a higher yen and lower feedstock price situation.
Now let us go to results by segment. Please go to Page 5. Starting with sales revenue. Total sales revenue was down JPY 14.6 billion year-on-year. By segment, IT-related Chemicals, Health & Crop Sciences and Pharmaceuticals saw increases. But on the other hand, Petrochemicals & Plastics, Energy & Functional Materials saw declines.
Breaking this down by factor, sales price variance was negative JPY 80.5 billion. Shipping volume variance, positive JPY 84 billion. Foreign currency conversion variance of revenue of foreign subsidiaries was negative JPY 18 billion.
Moving onto Page 6. Total core operating income was down JPY 17.6 billion year-on-year. By segment, IT-related Chemicals and Pharmaceuticals saw increases, but Petrochemicals & Plastics and Health & Crop Sciences saw decreases.
Now looking at this by factor, price variance was negative JPY 25 billion. Cost variance was negative JPY 9.5 billion. On the other hand, shipping volume variance, which includes equity in earnings of affiliates was positive JPY 16.9 billion. This JPY 16.9 billion includes minus JPY 11.7 billion of equity in earnings of affiliates.
This is due to margin declines pushing down profits.
Now let us look at results by segment. Please go to Page 7. Petrochemicals & Plastics, sales revenue was JPY 352.2 billion, down JPY 28.2 billion year-on-year.
Core operating income was JPY 17.4 billion, down JPY 18 billion year-on-year. Now sales revenue, Rabigh products shipments increased, but led by lower naphtha and feedstock prices, petrochemicals and synthetic resin market prices declined. Caprolactam and MMA market prices were also lower. So there was a decline in revenue.
Now core operating income in the absence of periodic plant maintenance conducted last year at Chiba Works and Singapore pushed up income, but at the same time, with lower margin in Petrochemicals and MMA income was pushed down.
Moving onto the next page. Energy & Functional Materials. Sales revenue was JPY 131 billion, down EUR 9.8 billion year-on-year. Core operating income was JPY 12.5 billion, down JPY 300 million year-on-year. Sales revenue, lithium-ion secondary battery separator shipments increased, but aluminum market price and cathode materials selling prices declined, and that led to a decline in revenue.
Now core operating income, shipping volume increases and impact of periodic plant maintenance at Chiba Works similar to Petrochemicals did happen. But with the deterioration of margin of aluminum and others, there was a slight decline in income.
Moving onto the next page, IT-related Chemicals. Sales revenue was JPY 206.9 billion, up JPY 11.4 billion year-on-year. Core operating income was JPY 15.3 billion, up JPY 500 million year-on-year.
Now sales revenue. On the sales prices side, polarizing film and touchscreen panel selling prices declined. But on the volume side, there was a growth in demand, leading to higher shipments. So there was a higher level of revenue. Now core operating income, negative impact of selling prices did happen. But with the higher shipments, overcompensated for this and income level was higher.
Moving onto the next page, please. Health & Crop Sciences. Sales revenue was JPY 146.3 billion, up JPY 8.2 billion year-on-year. Core operating income was minus JPY 8.2 billion, down JPY 10.7 billion year-on-year.
Now sales revenue, methionine market price fell, but with expansion of production capacity last year, shipments increased.
On the other hand, crop protection chemicals shipment decreased due to the impact of inclement weather in North America. As a result of these factors, the revenue was up year-on-year.
On the other hand, core operating income, with deterioration of margin of methionine, cost increases as a result of capacity expansion. And on top of that, there was a lower shipment of crop protection chemicals, this led to lower level of operating income year-on-year.
Next page. Pharmaceuticals segment. Sales revenue, JPY 247.4 billion, up JPY 4.7 billion year-on-year. Core operating income, JPY 46.9 billion, up JPY 7.6 billion year-on-year. Sales revenue in Japan, long-listed brand shipment decreased, but in North America, Latuda, a typical antipsychotic drug, such drug sales grew strongly, leading to higher revenue.
Core operating income, in addition to increases in shipment, sales, selling, general and administrative expenses came down, and the segment grew its operating income. So that's all about the segment returns.
Next, nonrecurring items. The content and the money amount of the nonrecurring items, as I have explained at the beginning of the presentation. So I would like to skip the explanation of the content. Next, I would like to explain the content of the consolidated balance sheet. Total assets. Please look at Slide #13, next page. Total assets as of end of September 2019 was JPY 3,206.1 billion, up by JPY 34.4 billion compared to last fiscal year-end.
Cash and cash equivalents has increased. Due to the application of lease under IFRS 16, property, plant and equipment increased. Interest-bearing liabilities was JPY 957 billion, up by JPY 117.5 billion from last fiscal year-end. Equity was JPY 1,322 billion, down by JPY 29.9 billion compared to last fiscal year-end.
This is mainly due to the decline of other components of equity caused by the further yen appreciation.
As a result of this, equity attributable to owners of parent to total asset, namely shareholders' equity ratio was 30.0%, down by 1.5 points from the previous fiscal year-end.
Next, I would like to explain about the consolidated statements of cash flow. Please go to Page 14. As cash flows from operating activities, there was an inflow of JPY 69.9 billion, up by JPY 14.3 billion year-on-year. Working capital decline is the main cause. Cash flow from investing activities had an outflow of JPY 72.8 billion, down by JPY 10.3 billion year-on-year. The main cause is the decline in outflow for acquiring fixed assets. As a result, there was free cash flow outflow of JPY 2.9 billion. And when compared to the JPY 27.5 billion outflow of the same period last year, the outflow went down by JPY 24.6 billion. Cash flow from financial activities had an inflow of JPY 80.3 billion, which was an increase of JPY 58.2 billion year-on-year. That is all for the outline explanation for the second quarter results.
Next, I would like to explain about the outlook for fiscal year 2019. Please look at Page 16. As for the full year forecast, we have revised the numbers announced in May.
As for the second half, we forecast that unclear business environment will continue based on rising global economic uncertainties such as the impact of U.S.-China trade conflict and others. Within this situation, we have revised our second half foreign exchange rate from JPY 110 per dollar to JPY 105 to a dollar.
For the full year to JPY 106.8 to the dollar. Sales revenue is now JPY 2,330 billion, down by 4.5% from the previous forecast. Core operating income is JPY 160 billion, down by 22% from the previous forecast. Operating income is now JPY 170 billion, down by 10.5% compared to the previous forecast.
Net income attributable to owners of the parent is JPY 50 billion, down by 50% from the previous forecast. Therefore we are forecasting a decrease in revenue and decrease in profit at each profit level. As for sales revenue and core operating income, we expect less revenue and income from exports due to appreciated yen. On the other hand, for Energy & Functional Materials, IT-related Chemicals and Pharmaceuticals, we forecast a continuing strong performance.
As for Petrochemicals & Plastics and Health & Crop Sciences, we expect a worsening of performance in the second half also, therefore we forecast a lower result than the previous forecast. As for operating income and net income attributable to owners of the parent, we are expecting a decrease in profit due to foreign exchange loss drawdown of deferred tax assets, in addition to the decline in core operating income.
On the next page, it will show the sales revenue by business segment. It's Page 17. As for sales revenue, we are expecting a decline in Petrochemicals & Plastics and Energy & Functional Materials, which we expect a decline in sales price due to the drop in raw material prices. Moreover, in Health & Crop Sciences, methionine market price is expected to be lower, in addition to the shipment decline in agrochemicals due to the bad weather impact in North America.
Next, Page 18, please. As for core operating income, Petrochemicals & Plastics will be lower than the previous forecast due to the margin deterioration in Petrochemical products and MMA and Health & Crop Sciences will also be lower than the previous forecast due to the worsening of performance of methionine and overseas agrochemicals.
This is all for the results explanations. Next, I would like to explain about the dividend. As explained previously, we have revised downward the full year forecast due to the outlook of unpredictable business environment.
Given the situation, we have announced that the second quarter end dividend and interim dividend will be JPY 11 per share, as originally announced.
However, as for the year-end dividend, we have changed the forecast from JPY 11 per share to undecided. We will re-announce it later after reexamining the second half and next quarter performance's trend. Lastly, I would like to explain about the issuance of hybrid bond that was announced today.
Please look at Slide 20. The company today has decided on the issuance of hybrid bond through a public offering with a maximum issuance amount set at JPY 150 billion (sic) [ JPY 250 billion ]. The company has set further improvements in our business portfolio as one of the basic policies within our fiscal year 2019 to 2021 midterm plan. As measures to realize this, the company has decided on acquiring the South American business of Nufarm, which is a major agrochemical company in Australia, in order to expand our global footprint in the South American region. Furthermore, we are planning to invest in the Petro Rabigh Phase 2 project, which is conducted by our joint venture company with Saudi Aramco. As a funding means to support the realization of both investment and building a more robust financial structures, we have decided to issue hybrid bonds.
Next page, please. This bond has features of both equity and debt. Thus since it is a part debt, there will be no dilution of equity. And on the other hand, has similar nature and features to equities such as an option to defer interest payments, extremely long-term redemption periods and subordination and liquidation of bankruptcy proceedings.
Therefore, we are expecting 50% of the funds raised will be deemed as equity by Rating and Investment Information, Inc. and Japan Credit Agency.
Maturity will be 60 years non-call 10 and non-call 5, which redemption before maturity will be possible after 10 years and 5 years from issuance, aggregated amount of the issue is maximum of JPY 250 billion. However, each amount will be decided based on issuing environments and demand from investors that we will know through our marketing activities.
This concludes the explanation from the company. Now we would like to take questions from you. Thank you very much for participating today.
[Operator Instructions] The first question is from Morgan Stanley MUFG Securities, Mr. Watabe, please.
First, IT-related Chemicals, in the second quarter, compared to your peers, compared to the first quarter, the trend is upwards. But even at the high level, you have peaked out. What is the reason behind that? And towards the second half, each product assumptions, if you could briefly cover that, please?
I'm Sasaki, I will reply that question. IT-Related Chemicals, polarizing film, starting with polarizing films. As you say, overall, first quarter and second quarter is almost flat and polarizing film, first for TV use, in the second quarter, was reasonably strong in our view. Partly panel prices was declining, so there are certain aspects of our negative development, but Sanritz was included as a group company, so the situation is not that bad. But for mobile use, for OLED use film, there's a certain customer for new models. Our product was adopted. For other customers, for LCD use, demand decline. So there are positives and negatives. But overall, the result was generally good. That is for a polarizing film. Now touchscreen panels. Glass type, OCTA, touchscreen panel continuing from the first quarter, second quarter was generally good. But for film type UBT, touchscreen panels, there was a slowdown somewhat, in our view. Our clients had a model change. When there's such a model change, these are the tendencies that we are likely to see. So that was a negative factor. Other areas did well, but there were some elements of declines. So generally, it was flat. So that's the level of sensitivity of the second quarter. But now going forward, JPY 27 billion per year is our expectation. So compared to the first half, second half is likely to deteriorate slightly. That is our expectation, at least that is how we see it. But now foreign exchange rate assumptions were given earlier on. Right now, JPY 108, but currently, it's JPY 108, but now we are assuming JPY 105, that is higher yen compared to the first half, and IT-related Chemicals will be impacted by a stronger yen. Other than that, other factors for TV use, there is saturation in the market. So the prices could tend to go down. And as you know, centering around film, there's seasonality. So towards the fourth quarter, there could be some declines. So that has been factored into the second half projections. Please understand this in that fashion.
Now Health & Crop Sciences. Last year, in the second half, JPY 17 billion; and this time, JPY 19 billion. So last year, in North America, because of bad weather, there was a big drop. But it's not that different this year, which means that weather factors are still dragging on methionine itself. Compared to the second half, I don't think -- margin is not going to deteriorate. The volume increases could be a positive. Can you talk about these developments?
Last year, compared to the second half of last year, what would happen this year in the second half. Well, from that perspective, it's only a slight increase that we are projecting. That was what you have said. Now crop protection chemicals, of course, North America, there could be recoveries. Basically, we believe that there will be recoveries in North America. But last year, in the fourth quarter, our sales came down, but we were selling reasonably, and that is now inventory in distribution. And that had an impact on the first half, and there could be some residual impact in the second half. So that is one. So that may be one of the factors why the growth is not as much as we wish. In addition, methionine. As for prices, is not coming up, and that is a fact. From November, operation has been started at a plant, but on the other hand, as of the end of September, there has been reduction in capacity, production capacity, which is about 10%. Plant has been shut down by that much. So there is the volume effect. But given the current price is reasonably low, it's quite low. So the volume effect, it's not that large as much as you might think, that is the sense that I got. But having factored those elements in, we are taking a conservative view here. So that is why -- where we see ourselves to be in.
Last year, in the fourth quarter, JPY 16 billion level. That's a reasonable level in your view?
Last year, last fiscal year. What I failed to say this time around is that there are differences in foreign exchange rates, which is quite big. Foreign exchange difference, I really cannot come up with a number, but several billion, JPY 5 billion or so could be the amount of variance due to foreign exchange. So when you have such an element, it might facilitate your understanding.
I would like to move on to the next question. Mizuho Securities, Mr. Yamada.
This is Yamada speaking. I'm Yamada from Mizuho Securities. I have 2 questions. First is regarding the Energy & Functional Materials. The lithium-ion battery separator that has grown steadily. But due to the volume difference, it is minus JPY 1.8 billion. What is the background on that? And lithium-ion battery, it is growing. But even with that and also being recovering from the scheduled shutdown of the Chiba Works, plus JPY 2.2 billion seems to be less than expected. Therefore, moving in the second quarter, was there a one-off cost that is pressuring the segment profitability. Looking at the full year, with the first and second half, it is going to be a declining profit. So which area is going to slow down? So please share the Energy & Functional materials situation.
The first question you asked is when you compare the last fiscal year's first half and this fiscal year's first half.
Yes, Page 8, the volumes different? Do you think that there should be a bit more of a difference? Is that probably what you're thinking?
Well, as you have pointed out, the last fiscal year, we had a scheduled shutdown of the plant. And there is the impact from that. And that impact is around JPY 1 billion is how we look at it. But the other factors, will the separators are experiencing an increase. Therefore, that positive number is reflected. I hope you can look at it that way. And when we look at the full year picture, the difference between the first and second half, meaning from the 2019 first half to the second half, it seems like the pressure is on the profit. One cause is the foreign exchange rate because we're looking at a yen appreciation. And for results and all, this second half, we are scheduling a shutdown, planned shutdown of the works. So that is going to work in a negative direction. Therefore, compared to the first half, the second half is going to slightly worsen.
The resorcinol periodic plant maintenance, when is that going to happen? And for the lithium-ion battery separator, at what percentage did it increase?
For the results in all it will be the old works. We are scheduling a periodic plant maintenance, I believe it was in the fourth quarter. Just a moment, please.
And the next question was the increase of the -- how much of an increase was in the separator?
The separators volume increase, as you know, what is our main usage will be North American automobile market. So the Model 3 and the other models we have in line, and as you know, the type of the product that is manufactured in the OLED works, it is slightly slowing down. But compared to that, the separators, other than the automotive onboard type of products is performing steadily. And regarding the sales volume, I should say, it is flat or there are some areas that are not going to increase that much. That is why we have come up with this forecast.
Okay, understood. My second question is regarding the hybrid bond. When we look at the conditions, the financial covenants and the commercial timing and commercial exchange, it seems that there's no condition on that. And for the refinancing limiting conditions, or are there any foreseeable conditions other than what I have mentioned, please let me know.
Our hybrid bond. Recently, the hybrid -- there are many companies that can issue hybrid bonds and subordinated bonds. And we would like to explain that it is a very general hybrid bonds that is no different than the bonds that are issued by other companies. So as you say, the initial, I should say, and after the initial redemption day whether there's a condition of interest increase or not? Yes, there is. It is not explained here, but that does exist. Therefore, it is not such a special hybrid bond is how I would like you to understand it. Because it is not a special hybrid bond, the -- there are other bonds that has a step up.
But the forced conversion to equity or due to the financial limitations, a forced redemption will not happen or a forced redemption due to financial covenant will not happen?
Correct. That will not happen. And regarding the redemption, after the end of the non-call period, it is possible to redeem it. But on the other hand, due to taxation reasons or tax system reasons within the current tax system. For the investors regarding the interest rate or the expenses, it can be included in the loss. So if there is a change in the situation, we may have to redeem. But other than that, there are no other major factors.
Moving on to the next question from Nomura Securities, Okazaki-san.
IT-related Chemicals. Some follow-up questions. What you said earlier, from quarter 1 to quarter 2, TV, polarizing film and mobile polarizing film and glass touchscreen panels. This is almost flat from the first quarter to the second quarter, and film came down. Is that the correct understanding?
No, film between first quarter to the second quarter, this is moving in a positive direction. Film, are you talking about polarizing film or film type for Touchscreen panel? This is down, yes, from the first quarter to the second quarter. Film-type touchscreen Panel is done, polarizing film for TV use as well as mobile use. It is higher income from the first quarter to the second quarter, yes, slight increase. Now in the second half for TV use, prices will be coming down, you said, but seasonality, even excluding seasonality, volume is not likely to come down. We don't have to be concerned about shipping volume coming down, or a major, extra-large, high-end products. This is our main product for high-end use. In a sense, in terms of shipping volume, there are concerns that it will go into negative, but there are areas where we can expand our sales. So in terms of shipping volume, it may not change that much. But for high-end use, these products, they are now penetrating into the market. So gradually, prices could come down. That's the outlook that we have. So that is why from the third quarter onwards, there could be some negative developments there. Now film touchscreen panel. In the second quarter, it has come down.
You talked about model change. Fierce competition with your peers, is that happening or not?
Our competitors, it's not possible to talk about our competitors, from my side, but what I wanted to say is that customers are conducting model changes. So it's a relation to that. So that is what I meant to say. From the third quarter onwards, in the same way, there could be some upswings and downswings. Especially in the fourth quarter, there is going to be the seasonality element slowing down things. That's been the experience in the past.
One more question. This year, cash flows, operating cash flow and investment cash flows, are there any new projections for this year?
This fiscal year, full year cash flow projections, I think it's a question that you raised, but I don't have the numbers with me in front of me. But what you're saying is that we made changes to our forecast. For raising funds, there are these different elements. We will be making investments. Having said that, the closing timing is still not certain. So what I can say right now, I don't have the numbers to be able to give to you. Now cash flows from operating activities, JPY 220 billion, it was the number that you were talking about earlier, I suppose. Core operating income is about JPY 45 billion, down by about JPY 45 billion. So conventional wisdom tells us that it could decline by about the same margin.
It is now getting close to the finishing time, so the next question will be the last question. SMBC Nikko Securities, Mr. Takeuchi.
This is Takeuchi SMBC Nikko. I have 2 questions regarding Petrochemicals & Plastics. At the Petrochemicals & Plastics, on Page 28, in the second quarter, Q-on-Q quarter, there is about JPY 9 billion of the profit decline. So can you explain about the second quarter and a quarter-on-quarter basis?
The core operating income for Petrochemicals & Plastics, the first quarter is JPY 13 billion, and the second quarter is EUR 4.4 billion. I think you're talking about this part, yes. In between, there's a decline in margin. Several cases of that, especially MMA and lactam, compared to the first quarter, it has rapidly declined. That has surfaced. That's one reason. And Petro Rabigh, there was a 3-month timing difference. The first quarter, which is January to March and the loss from that time to April to June, their manufacturing margin has gone down largely, and that is also the factor of worsening the numbers. So the second quarter numbers does not have a onetime accounting reasons, but it is naturally occurred numbers due to naturally occurred reasons. There is no special reason that I have to mention to you. The second half is JPY 6.6 billion. So it is doubling the 2 quarters. So there's a level up in the level.
So the margin and the pricing, are you projecting a lower level than the second quarter moving forward.
First of all, regarding several margins, we are expecting it to be lower or even a more severe condition. And for the probably olefin, we believe that it is going to experience a rapid decline in the second half because when we made this forecast, the U.S.-China conflict, we expected that the Chinese economy is going to slow down. Therefore, Petrochemicals & Plastics gets impacted by the automobile industry is a trend. That is why we are looking at it in a more severe expectation.
And polyethylene from the shale oil. There is a part of a full-scale import that is coming to Japan, and that is an impact too. Therefore, we are expecting the second half for Petrochemicals & Plastics to worsen.
So MMA in the Singapore situation of your company, you're saying that the MMA is going to slightly worsen again?
Regarding MMA in the second quarter, it has experienced a rapid decline, and we are expecting this situation to continue. Regarding the restart that you have asked, our restart that was scheduled, the situation is not at a level to actually not restart the works.
Okay, understated. Rabigh, the third quarter results were better than the second quarter. And so this -- is that the base that is reflected in your second half forecast? Or the assumptions that you have are when the Phase 2 will start, et cetera? Can you share that with me that?
Petro Rabigh is a listed company, so there are many factors that I cannot share with you. But how we look at the profit and loss is something also that I cannot share with you that much. So what kind of numbers are reflected in our forecast is slightly difficult to share with you. So I hope that you understand this point. And you're talking about Phase 2. That is also a listed company. So probably recently, there will be some announcement from PRC, so we're having expectations for [indiscernible].
That concludes the Q&A session. Firstly, Mr. Shigemori from Sumitomo Chemical will make some concluding remarks.
Thank you very much indeed for joining us for this conference call. This time around, full year forecast was to be changed -- amended. Sorry about causing concern to our investors and analysts because of uncertainties in world economies. For the second half, we are projecting a tough business environment. But still, we would like to push forward with our program to improve our business performance so that we can live up to the expectations of you. We seek your continued support.
Now thank you very much. This conference call is going to be archived on the website of Sumitomo Chemical for the next 3 months. It will be distributed from our website for you to be able to play it at your convenience. That concludes the conference call for today. Thank you once again for your participation. [Statements in English on this transcript were spoken by an interpreter present on the live call.]