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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.
We will start the online briefing for the third quarter FY '22 financial results. My name is Ogawa. I'm with Communications and IR. I'll give most of the summary today. Today, we have CFO, Senior Executive Vice President, Shinji Miyaji. And also Senior Executive Officer and GM of Finance Control Division, Toshiro Kasuya will talk to you today. The third quarter earnings announcement will be explained by our CFO, Miyaji-san, followed by Q&A session. We are scheduled to finish at 5:00 AM. Thanks for your support. And Miyaji-san, please begin.
Yes, this is Miyaji speaking. Thank you. Please turn to Page 3. These are today's key points. For the first 9 months of FY '22, net sales was JPY 1.4989 trillion. Operating profit was JPY 152.1 billion and net profit attributable to owners of the parent company was JPY 98.8 billion. Net sales reached a record high. The outlook for the full year is net sales of JPY 2.05 trillion, operating profit of JPY 190 billion lower than the previous forecast by JPY 40 billion and net income attributable to owners of the parent company is JPY 92 billion lower by JPY 28 billion, both due to high raw materials and fuel prices declined in PVC market in the chlor-alkali business and a sharp decline in demand in the display business.
Please turn to Page 5. I'll now explain the results for the first 9 months of FY '22. Sales were boosted by increased shipments of life sciences, fluorochemicals-related products, electronic materials and architectural glass and the higher sales prices for chlor-alkali products and architectural glass.
In addition, the impact of weaker yen contributed to an increase in sales of JPY 265.3 billion compared with the same period of the previous year. Operating profit increased by JPY 3.7 billion due to the revenue increase factors mentioned earlier, despite the impact of higher raw materials and fuel prices, particularly in Europe. Profit before tax decreased by JPY 19.9 billion to JPY 165.2 billion due to a gain on sale of a North American building glass in the same period of the previous year despite gains on the sales of land and affiliates as other income. Net profit attributable to owners of the parent company was JPY 98.8 billion.
Next, I will explain the results by segment. Please turn to Page 6. In the first 9 months of FY '22, Glass and Electronics saw sales increase and profits decreased with sales and profits both increasing in Chemicals.
Please turn to Page 7. This section explains the variance in operating profit in the first 9 months of FY '22 compared with the same period of the previous year. Sales volume and product mix accounts for JPY 15.8 billion. Shipments of life science products, fluorochemical-related products, electronic materials and architectural glass increased. The difference in sales price is JPY 147.1 billion, selling prices of caustic soda and architectural glass increased. The raw material and fuel price differences is minus JPY 131.9 billion. Raw materials and fuel prices increased mainly in Europe. The cost and other differences is minus JPY 27.2 billion, the manufacturing cost of displays increased due to the impact of foreign exchange rates. In addition, fixed costs and other costs in life sciences rose. As a result, the group recorded an increase in OP of JPY 3.7 billion to JPY 152.1 billion compared with JPY 148.4 billion in the prior year.
Please turn to Page 8. This is the balance sheet and the comparison with December 2021. Total assets amounted to JPY 3.0162 trillion, an increase of JPY 350.2 billion compared to the end of December '21. There was a foreign exchange impact of JPY 260.1 billion. D/E ratio was 0.38.
Please turn to Page 9. This section explains the cash flow statement for the first 9 months of FY '22. Operating cash flow was JPY 158 billion. Investment cash flow, JPY 79.1 billion. And as a result, free cash flow amounted to JPY 78.9 billion.
Please turn to Page 10. I will now explain capital expenditure, depreciation and R&D. In the first 9 months of FY '22, capital expenditure was JPY 150.2 billion. Depreciation was JPY 137.5 billion, and our expenditure was JPY 38.2 billion.
I will now move on to explanation of each segment. Please turn to Page 12. First, let's take a look at the Glass segment. For Q3 of 2022, net sales were up year by JPY 106 billion to JPY 650.7 billion, and operating profit was down year-on-year by JPY 11.5 billion to JPY 13.7 billion. Architectural Glass, net sales increased by JPY 69.8 billion to JPY 349.7 billion due to increased shipments in Japan and Asia as well as higher selling prices in all regions, especially in Europe despite lower sales due to the divestiture of the North American Architectural Glass business.
Net sales of Automotive Glass increased by JPY 37.2 billion year-on-year to JPY 300.2 billion due to an increase in shipments as the effects of the price revision began to emerge in addition to an easing and the impact of the shortfall in the supply of parts, including semiconductors. Operating profit decreased by JPY 11.5 billion from the same period last year due to the impact of higher raw material prices, which was partially but not completely offset by the increase in revenues mentioned abroad. The ratio of the operating profit in the Glass segment was 130% for Architectural Glass and minus 30% for Automotive Glass.
Please turn to Page 13. I would now like to make some additional comments on the Architectural Glass. Demand in Japan, Asia and South America remain brisk. On the other hand, Europe is in an adjustment phase affected by higher energy prices and economic slowdown.
I will now touch on the initiatives taken in Europe. Please turn to Page 14. As you can tell from the graph on the left-hand side, in Europe, the price of natural gas has been rising since 2021. In response to this, in February 2022, we introduced an energy surcharge in our Architectural Glass business to pass on the higher price of natural gas to the selling price. In addition, in June, we formulated a BCP, a Business Continuity Plan in response to natural gas supply disruptions. And in July, we launched the low carbon glass product.
In October, we temporarily halted operations of our furnace in France and began adjusting operations at several sites, thereby responding swiftly to the ever-changing trends in the European market. The operations in Europe are in a temporary adjustment phase due to the emerging economic downturn. However, we expect profitability to recover in the mid- to long-term basis due to an increase in demand for energy saving glass. Therefore, our profitability should improve as we see recovery in the market.
Next, I would like to explain the situation of Automotive Glass. Please turn to Page 15. The business performance of our Automotive Glass is in a very challenging situation. We have been explaining this to you from the past. This is due to the decline in the number of automobiles produced as a result of COVID-19, followed by a continued slurp in the number of units produced due to supply chain disruptions, inclusive of semiconductors.
In response, we have revised our pricing policy, lowered fixed costs through structural reforms and increase added value through the development of high-performance products. We have already implemented a wide range of price revisions. And in response to rising gas prices in Europe and other regions, we are proceeding with further price revisions. So gas prices are still increasing. So we are ongoing with additional price revisions. Also in the second half of 2022, the number of automobiles produced has already begun to recover moderately, especially in Asia. We believe, therefore, that the Automotive Glass, the worst situation is over. We will continue to implement measures to improve profitability.
Next, I will explain about the Electronics segment. Please refer to Page 16. Cumulative sales for Q3 for FY 2022, JPY 7.6 billion to increased by JPY 7.6 billion to JPY 225.8 billion, and OP decreased by JPY 12.2 billion to JPY 12.3 billion. And the Display business. Net sales decreased by JPY 14.7 billion to JPY 121.6 billion due to a decrease in shipments of glass substrates for LCDs and specialty glass for displays. The shipment volume of glass substrates for LCDs decreased by high teens percentage. The sales price of glass substrates for LCDs fell slightly compared to the previous quarter.
Net sales of Electronic Materials increased by JPY 22 billion to JPY 102.5 billion due to an increase in shipments of semiconductor-related products, optoelectronic materials. Operating profit decreased by JPY 12.2 billion to JPY 12.3 billion due to an increase in depreciation expenses for glass substrates for LCDs, accompanying the startup of new facilities and an increase in manufacturing costs resulting from the higher raw material and fuel cost and the effect of foreign exchange rates. The operating profit for the segment, the composition is Electronic Materials, 120% and Display accounting for minus 20%.
Please turn to Page 17. Now I'd like to give you an additional explanation of the status of Display business. Currently, panel makers are in an inventory adjustment phase due to the rebound in demand from the stay-at-home demand under COVID-19. In addition, as we have explained to you beforehand, we still have production lines that have not been optimized for large-sized panels. So while we are still facing the challenge of an inefficient production system, the rising price of raw materials and fuel and the sharp depreciation of the yen of increased production costs and worsened our business performance, making the situation extremely severe.
Although the demand is on the level of a temporary adjustment, stable growth is expected in the medium to long-term basis. Because the TV demand, we perhaps about 200 million units or so. And of course, as we see the display panels getting larger, we do believe we should get back on the steady trajectory. In addition to the ongoing conversion to optimal facilities for large-sized panel production, we will accelerate efforts to improve asset efficiency, including the consideration of fundamental measures to improve profitability. We will accelerate efforts to improve asset efficiency, including the ongoing conversion to optimal facilities for large-sized panel production and consideration of drastic profit improvement measures.
Next is Chemicals segment. Please turn to Page 18. In the first 9 months of FY '22 net sales amounted to JPY 599.1 billion, operating profit JPY 122.9 billion, representing an increase of JPY 148.4 billion in sales and JPY 26.9 billion in profit compared to the same period last year. In Chlor-alkali & Urethane, sales increased by JPY 92.2 billion to JPY 371.4 billion due to firm market conditions for caustic soda as well as the impact of foreign exchange rates.
In Fluorochemicals & Specialty, sales increased by JPY 26.2 billion to JPY 115.9 billion, due to significant increase in shipments in chlor-alkali, fluorochemical-related products, mainly for semiconductor-related applications. Life Science sales increased by JPY 29.4 billion year-on-year to JPY 110.3 billion due to an increase in contract sales for both synthetic pharmaceutical and agrochemical CDMOs and biopharmaceutical CDMOs. Operating profit increased by JPY 26.9 billion to JPY 122.9 billion compared with the same period of the year. The composition of operating profit in the Chemical segment was 60% Chlor-alkali & Urethane, 20% Fluorochemicals & Specialty and 20% Life Sciences.
Please turn to Page 19. This is additional information on the caustic soda and PVC market in Southeast Asia. The caustic soda market remained at a high level, partly because of high level of electricity charges in Europe and some of this impact basically made the global market for caustic soda quite tight. And the natural gas prices was also high.
In terms of PVC spread, there was a long-term impact of the lockdown in China and monsoon in India also lasted longer than usual. And therefore, there was a variation in the PVC business in Southeast Asia, and the spread was narrowed in the third quarter. We believe that the PVC market is expected to cease the fall of the course of the fourth quarter, but we cannot expect a sudden or rapid recovery in this area.
Please turn to Page 20. Next, I would like to talk about the Fluorochemicals & Specialty business, which is growing in both sales and operating profit. AGC has positioned Fluorochemicals & Specialty business, as you can see to the left of this panel as a growing business with high asset efficiency and carbon efficiency. Although this is not part of a strategic business, we do have high expectations for these businesses of high growth.
Our group's strength is shown in the middle of this slide. We have long-term experience with fluorochemicals technology. We have been cost driven for many years. And now for the market, the demand is expanding, and there are many niche markets and our products are very specialist. We have many world #1 market share products, and we are growing very fast in this area. And based on this trend, we would like to achieve sales of more than JPY 200 billion by 2024. Life Science by 2024 would achieve or exceed the sales of JPY 200 billion. And almost at the same time, we would expect the Fluorochemicals & Specialty to reach the same size in terms of business. So we would like to ask you to focus on this segment.
Please turn to Page 21. This is the strategic business. Overall, this business recorded sales of JPY 233.1 billion and operating profit of JPY 49.9 billion in the first 9 months of FY '22. This is a year-on-year increase of JPY 56 billion and JPY 15.3 billion, respectively. Third quarter group profit versus the ratio of strategic business, where basically 60% of the profit is coming from strategic business in the third quarter. Therefore, the business is steadily expanding, particularly in Life Sciences and Electronics.
Please turn to Page 22. This is a performance by region comparing the first 9 months of FY '22, the same period of the prior year. In Japan and Asia sales and profits increased due to higher sales prices. Our caustic soda, despite the impact of high raw material and fuel prices as well as higher production costs for glass substrates for LCDs and automotive glass.
In the Americas, Sales of contract by pharmaceutical increased, although the transfer of the North American Architectural Glass business had a negative impact on the revenues. And they also increased and profit decreased mainly due to the upfront fixed costs for the expansion of the biopharmaceuticals business and start-up of new site. In Europe, sales prices increased in Architectural Glass. Sales increased, but profit decreased mainly due to the impact of higher natural gas prices.
Please turn to Page 24. I will now explain the full year forecast for the fiscal year ending December 2022. As I mentioned at the beginning, the forecast for the full year operating income and the items below has been revised downwards from the August 2 announcement. Net sales are expected to rise by JPY 352.6 billion to JPY 2.05 trillion, while operating profit will decrease by JPY 16.2 billion. Profit before tax will decrease by JPY 31.8 billion to JPY 177 billion, profit attributable to owners of the parent is expected to decrease by JPY 31.8 billion to JPY 92 billion. We have also revised our full year exchange rate forecast to JPY 132 to the U.S. dollar and JPY 137 to the euro. The full year forecast for Dubai crude oil prices has been revised to $100 per barrel.
Please refer to Page 25. Next, I will explain the key points of the revised forecast by segment. We have left the previous forecast for net sales unchanged due to price revisions in the Glass segment and the impact of the yen's depreciation. The forecast for operating profit is revised downwards in all segments due to the rise in raw material and fuel prices, impact of the decline in the PVC market and the chlor-alkali business and sharp decline in demand and display business.
Please turn to Page 26. I will now explain the forecast for each business segment for Q4 of FY 2022. In the Glass segment, there are concerns about the impact of continued strong raw material price and the economic slowdown in Europe and other regions on Architectural Glass. In Automotive Glass, moderate recovery is expected in global auto manufacturing volume recovering from the impact of shortfalls in component supply, including semiconductors.
Although there are concerns about the impact of higher and staying raw materials and fuel prices, the effect of the revised pricing policy is expected to emerge. In the Electronics segment, with regards to displays, sales of glass substrates for LCDs are expected to be affected by the impact of capacity utilization adjustments by LCD panel manufacturers. The impact of the sharp price in raw materials and fuel prices, and the weakening of the yen, which will lead to higher manufacturing costs.
In the Specialty Glass for Display, shipments are expected to increase due to the demand season. In Electronic Materials, shipments of optoelectronics materials and semiconductor-related products are expected to increase. In printed circuit board materials, there are concerns about the impact of economic slowdown on demand. In the Chemicals with regard to chlor-alkali polyurethanes, market prices for caustic soda will remain at high level. Although the PVC spread contracted in Q3, the PVC market is expected to bottom out in Q4 and fluoro products and specialty demand for fluorochemical-related products, particularly for semiconductor applications is expected to remain strong and shipments are expected to increase.
In the Life Science business, CDMO demand for synthetics and agrochemicals expected to be strong. In biopharmaceutical CDMO, a reactionary downturn is expected in Q4 due to the concentration of contract sales in Q3. Specifically, this is due to the temporary occurrence of -- and the biopharmaceutical cancellation fees in Q3.
Please refer to Page 27. So there's no change in the outlook for our strategic business. As a result of steady growth of business, we expect net sales of JPY 320 billion and operating profit of JPY 70 billion for the full year.
Please refer to Page 28. The annual CapEx and depreciation forecast have been revised from those announced at the beginning of the fiscal year to JPY 240 billion and JPY 185 billion, respectively. R&D expenses unchanged for the initial forecast of JPY 54 billion.
With that, that will be the end of my presentation. Thank you very much.
Thank you, Miyaji-san. Now we would like to open the floor for questions. [Operator Instructions] We would like to start with some of the questions that we had received in advance. First question. Can you please explain the outlook for FY '23 for each business segment? Miyaji-san, please take this question.
This is for next year, which means that we're not ready in a position to be able to provide detailed explanation about the outlook now, and the economic situation is very unstable. And there is hardly any visibility into the future. Please wait until February next year until we make the announcement.
But as I have explained earlier, in the Automotive Glass segment, it has really hit bottom and the volume has started to recover. So if everything goes as normal, the performance related to automotive should recover. And Display is also close to bottom. But once the investment in inventory adjustment is completed, although it's very difficult to tell when, demand is definitely there. So we believe that we will see a recovery in that segment as well.
And we can be pretty much convinced in saying this. And we believe that the strategic segments will continue to grow steadily next year. But other than that, in all the other segments, we have to think about the impact of the economy, which is very difficult to forecast at this point in time. That's all I can share with you at this point in time. Thank you for your understanding.
And the next question relates to the concerns related to the slowdown in the semiconductor-related demand. So we would like to ask for your outlook for EUV and semiconductor-related products and also the PVC market, where there has been a large adjustment.
So this is Miyaji answering. So in terms of the semiconductor, the market itself is in the downturn. However, the high-end products are not overly impacted by this trend. So as far as AGC's EUV and also because of the customer's utilization -- so we -- but -- so we have seen some weakness, but CMP and others are favorable. So we are not overly concerned. And of course, EUV is under adjustment where the demand continues to be brisk. Therefore, we believe next year onwards, we shall see a dramatic recovery.
Now in terms of the PVC market, to be honest with you, the droppage has been larger than expected. We didn't really expect the impact from the prolonged lockdown in China to be so large. However, we do not believe this will be continued either. We shall see a recovery at some point. But at 1 point that we are concerned, it relates to the global economy, how brisk and how solid would it be? Also how quickly should we see recovery in China, what will become the lockdown and the economic growth. Those are definitely the concerns.
In terms of Southeast Asia, as we have shared this before, if it becomes weaker, there has been an investment for infrastructure to support the economy. So we are not overly concerned about the demand diminishing in Southeast Asia. So -- and -- so because of -- so the question is, how the PVC price would move depending on the Chinese economic situation. But at this point, it is highly uncertain at this particular juncture. We're not overly concerned that it will get worse than it is now. But whether the demand will fully recover, it is hard to tell at this moment.
Moving on to the next question. In the second quarter earnings announcement, Mr. Miyaji, you said that there will be no major adjustment for PVC. But since summer, there's been major adjustments, maybe the company is not very good at forecasting the assumptions, market assumptions for the short term. What is your view on this? Mr. Miyaji?
Second quarter earnings announcement up until then, high price was continuing. And just immediately before the announcement, there was a decline in PVC price, and it was a big step. I thought it would recover, but the recovery was weaker than expected. So therefore, yes, maybe we were not very good at forecasting what would happen for the short term.
But in the second half, as I mentioned before, the level was too high. It was too good to be true, and we had to expect some adjustment. And at that time, I mentioned that there should be no sharp decline. There should be mild adjustments. That was our forecast. And based on that -- compared to that, we saw a quick impact of lockdown in China. At the time, it was difficult to know about or understand about, and this is something that we have to learn from.
So what is the outlook for the global automotive production from this year into next year. What are some of the risks you anticipate? Our CFO, Miyaji, would answer this.
The production volume for automotives, there has been expectations that it may recover, but perhaps it is not happening. So initially, it was expected to be 2023, but now perhaps it will be pushed back to 2024. So that is the current state in terms of the recovery of the global automotive production.
As far as Asia is concerned, already we are seeing some improvement in the supply of semiconductors. So the production volume is coming back. Therefore, it is bottoming out. So we do have this data from IHS. We always take reference of the data. According to this, in 2021, 77.2 million units. That was the actual number. And for 2022, 81.6 million. So in comparison to the previous year, is increase in 2023, 85.9 million. So prior to COVID-19, about 90 million was the unit. So we believe that is the trajectory to recovery.
Next question. Input costs such as energy, with regard to key input costs, what is your expectation of how the price would transition in the future, Mr. Miyaji?
As far as input cost is concerned, gas and electricity are the big ones. Specifically with regard to gas, we should talk about gas in Europe. Energy surcharge in the Architectural Glass, we basically passed on the price increase. So we have absorbed most of that, but we don't have the same mechanism for Automotive Glass. So we're struggling. It's more difficult for us.
Gas price right now because of high level of inventory has come down recently, but this is only temporary. After the winter, the inventory would be used up and they has to be stored again. So we don't know. We will see another price surge equity this year, but it would probably trend high. Electricity is generated sometimes by gas.
In terms of energy cost, we expect the electricity price to also trend high. Architectural Glass energy surcharge is 1 mechanism that we should take advantage of. For automotive, we use both gas and electricity. So through a price revision, we want to make a recovery. I think it's very important to combine different measures such as these.
The next question, we have seen decline in the natural gas price. So will there be an improvement in the raw material and fuel cost for Architectural Glass for Q4? So again, Miyaji-san, please.
In terms of the cost for raw material and fuel, of course, that is related to gas. So it is bound to come down. But the largest market, which is in Europe, what is important is Q4 onwards, we have Christmas in the winter season. Therefore, the Architectural Glass, you will not see much of a movement. So we do not believe that this would lead to a dramatic improvement in the performance.
Next question, Chemicals segment. Subsegment OP ratio. That's the question. Based on this ratio, life science OP, if we calculate that, in the third quarter, it is improving dramatically. What is the reason behind this? And also do you think this high level of profit is sustainable? You also mentioned cancel fees. So please talk about the impact of cancellation fee as well. Mr. Kasuya, please.
Every quarter, the ratio of profit is shown as an image. But we are only showing in 10% increments, which means that every quarter, the numbers are fluctuating to some extent. If you use this multiplication, third quarter life science profit looks as if it has grown dramatically. And the margin seems to be quite high. But the actual fluctuation or change is not that large in the first, second and third. As far as the cancellation fee is concerned. Some clients wanted to guarantee of operation and some fees have been paid to us to make it work. I cannot really name specific names, but some form of a profit guarantee is actually being provided. This is supportive for our revenue, and it's within a contract.
Next question is related to glass OPM for Q4. So Q4, the operating profit expectation Q-on-Q basis is expected to improve by JPY 3 billion. If you look at the architectural and automotive glass, what are your outlooks? So Miyaji -san, please, for this segment.
This is primarily from Automotive Glass because we are expecting improvement in the units, production units and the price revision is underway. So the impact we shall see. So automotive will be primarily the factor behind that.
Next question, price increase for Automotive Glass. How much increase did you achieve in the third quarter, despite the price increase, you're still running deficit because of the market price deterioration. So how can we expect -- what can we expect in terms of impact on the price revision going forward?
EU Automotive segment is in the worst status right now, so we are focused on that right now. In the second half, the price increase range will expand. Price revision has already been implemented to some extent. But to the end of the year, the larger the prices hike. Gas price was surging and the normal price revision range would not have been sufficient for improvement. So additional price revision is being implemented as we speak.
And toward the end of the year, we will be seeing the impact of this in the fourth quarter. So we should expect some degree of impact coming from this. Outside of the EU included the impact of a price revision will be mostly for next year. So for this year, we will see some impact in Europe, but for Automotive business in general, we cannot expect an overall improvement of recovery because we don't have enough time left to the end of this year, but we will begin to see the impact in the next year.
Next question relates to the Glass business. If you can give us more color by region? And also with the increase in the utility cost, are you seeing more inquiries for low E or low emissions display glass? So again, MiyajI-san, please answer.
I have already shown the slide in my presentation. So as you can tell from this, the weather forecast. So of course, Brazil continues to be fairly brisk. Japan and Southeast Asia, it's cloudy to sunny weather, not completely sunny and fair. However, it is much better than before. The pricing has been rising, therefore, not overly concerned.
Of course, in terms of asset efficiency, we still have some issues. But all in all, we are definitely reaching towards a satisfactory level. So the question, the area under concern is Europe. The demand continues to be very strong. So the -- but of course, there's been initiatives to lower the gas consumption. So to have higher density for the buildings, that is of emergency. The -- because the heat is discharged from windows as far as buildings are concerned. So they would need to make this highly efficient. The windows needs to be highly efficient.
That is the emergent issue. So we shall see push from this renovation wave. This is fairly strong. However, at this particular juncture, we are seeing some uncertainty in the economy. So the demand is strong, but there is a concern whether this is sustainable. Also, if we were to add the energy surcharge, the glass -- architectural glass will become extremely expensive. So of course, everything is expensive, inclusive the construction cost. So the demand is strong. However, the cost surge may actually dampen that demand strength. So there's a question on the sustainability of this.
Next question about the Electronics segment. Fourth quarter operating margin. Quarter-to-quarter, it's going to be flat. But there for Display and the Electronic Materials, what is the breakdown? And what is the view for each of these subsegments, Mr. Miyaji?
Electronic Materials is usually second half heavy in terms of volume. So it will continue to do well. As for Display, operational adjustment by our clients will continue for a while. And therefore, the situation will continue to be challenging for Display business. That is our outlook.
Next question is also on the Display glass. As mentioned, the panel makers operation has bottomed up in September. So what is the outlook for AGC?
In terms of the demand for glass, our outlook is not overly different from Corning. So the Display glass, the total demand as a whole. In Q4, we shall see a slight increase on a Q-on-Q basis. However, in terms of shipments for AGC, because of the timing of the recovery of the operation of the clients, we shall see a slight decline on Q-on-Q. Therefore, there will be a slight different -- slightly different trend in comparison to the market. Beyond that, for FY 2023 from the first half, we shall see the inventory adjustment takes around. So perhaps in the second half 2023, we shall see a full-fledged recovery. That is the current outlook.
Next question. EUV masks blanks year-on-year growth. Can you please talk about this? For the 9 months of fiscal year, year-on-year and also quarter-to-quarter comparison would be appreciated.
As I explained in the previous earnings announcement, because of the preparation for operation by a client, we are at a flat phase right now. Year-on-year, it is basically about the same level as the previous year. Q-on-Q is a little bit too detailed for me to comment on. But as for this year, we expect the level to be the same as previous year. And the recovery should happen next year and beyond. We expect a big volume increase starting from next year.
Next is related to the outlook for the full year. Why have you decided to revise the full year forecast in such a short duration of time? So again, Miyaji-san, please.
At the time of the announcement, the JPY 210 billion has been the number that we have disclosed. But in terms of the first half and the second half comparison, so we have JPY 95 billion and then we have the remainder in the second half. So that has been the initial expectation. However, so we have JPY 115 billion on the first half in terms of the profit. Therefore, more profit in the first half. Therefore, we actually sustained JPY 115 billion for the second half, thereby retaining the number.
So the level of first half was fairly high. In the second half, at that point, we do not see many factors to revise this downward to JPY 115 billion. Therefore, JPY 230 billion was the initial announcement. But as a result, right now, perhaps we would have about JPY 75 billion for the second half of the year, given the current trends. And because of the factors I have explained today, the performance was weaker than initially expected. That's where we stand now.
Next question. Downward revision of the performance. And the payout ratio for this year is higher than 50%. But is there a possibility of reduced dividends. Miyaji-san, please.
So 40% is the fresh, the benchmark, and we want to keep it stable and be flexible with share buyback. That is our policy. So right now, we have seen a possibility of reducing dividends.
Next question the cash and deposit level is fairly high. However, the CapEx on the decline. If you have excess capital, would you consider share buybacks? So again, Miyaji-san, please answer.
In terms of CapEx, the progress of these large-scale projects are delayed. So for this fiscal term, we have seen a decline in the amount of CapEx. However, the projects are still ongoing. So it just so happens that amount spent this year is lower. So Q4 onwards, we shall see more expenses being realized. Therefore, on a full year basis, this is the outlook.
In terms of excess capital and excess cash, it may appears to have been accumulating. But we do have cash been accumulated in the companies, they may have opportunities. And of course, as we have more CapEx, that would start to decline. Share buybacks, we would like to look into that flexibly. Nothing has been decided right now. So that's the general policy right now.
Next question. The economic outlook is curating fast. Do you need to revisit your CapEx plan for the future? Mr. Miyaji?
CapEx is set high for strategic and growth businesses. So we believe that these businesses will grow regardless of the economy. And therefore, we do not see any need to revisit the plan as of now. And when it comes to the core business, we have already narrowed down and selected the CapEx plan. So I don't think we need to revisit the policy right now.
He would like to know more about the current state of operation in Russia. So we will continue the business. Miyaji-san, please answer this question.
The Russian business. So because of the invasion into Ukraine, we have decided that we will not make any new investments. So we haven't conducted that this year. Also because of the sanctions in EU in relation to that, so Russia is operating on a stand-alone basis. So there is no movement of people or cash. That's where we are right now. So we have been able to operate Russia on a stand-alone basis right now. But of course, we are seeing the situation changing. So accordingly, as mentioned before, we will look into different possibilities and take measures accordingly.
Next question. Net profit for the quarter. So net profit attributable to the current -- this is smaller than before. What is the reason behind this? Mr. Kasuya, please respond to this question.
As for the net profit attributable to the parent owner of the company and then there is the equity portion. Chlor-alkali business for Southeast Asia has been quite strong recently. And Southeast Asia chlor-alkali business -- for this business, not 100% investment ownership, but we have a joint venture format. For example, 70% ownership in Thailand and 50% -- just over 50% in Indonesia. So this is the equity holding. So for overseas chlor-alkali, for noncontrolling equities, the profit will be distributed -- attributed. So we believe that, that is the impact that you're seeing.
In strategic business, 100% investment is done to most of the entities. So we have 100% ownership. More of them -- so as we continue to see an increase in this type of cooperation, we expect to see an increase in the income attributable to the owner of the parent.
So we have 1 additional question remaining. [Operator Instructions] Next question relates to FX movement and also geopolitical movements, including China. Is there a possibility that it may pose impact on your CapEx? And also about the production site plan. Also, in some cases, would you return some of the cash from overseas back to Japan, depending on the FX. Miyaji-san?
So in terms of geopolitical risk, as I mean we are aware of the current situation is inclusive of risk hedge, we would definitely need to look into these. Whether we would change our plan of our CapEx on a short-term basis, that is not the case. However, on the mid- to long-term basis, we do need to consider the mid- to long-term basis and looking to hedging the risk. So that is quite natural to consider that.
But right now, on a short-term basis, no plan to change. Also in terms of the cash and deposits, so it is true that we have deposit located in many regions. And by remitting those back in Japan, we may need to consider some of the tax issues. So those we need to consider. But right now, we have no intention to return some of those cash back to Japan.
Thank you, Mr. Miyaji. We do not see any additional questions. And since it's almost time to close the session, we would like to close this meeting for now. If you have any follow-up questions, please contact the IR team. Thank you very much once again for joining us today. And this concludes the third quarter earnings call. After closing the Zoom screen, you'll be directed to the questionnaire, which should take only a couple of minutes to respond. We appreciate your kind response so that we can improve on our IR activities. If you have any additional questions, please let us know. The phone number is 033-218-5090. Thank you very much for your kind attendance.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]