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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
We will now begin the briefing on the financial results for the second quarter of the fiscal year ending March 31, 2022, of Hitachi, Ltd. Thank you very much for joining us today despite your busy schedules. Today's presentation materials are available on the Hitachi, Ltd. IR website and the news release website.
I would now like to introduce the speakers to you: Yoshihiko Kawamura, Senior Vice President and Executive Officer, CFO; Tomomi Kato, General Manager of the Financial Strategy Division; Masao Yoshikawa, Executive General Manager of the Investor Relations Division.
The outline of the results will be given by Mr. Kawamura. And we will now be switching over the screen. Kawamura-san, please go ahead.
Thank you very much for attending this briefing today. We will be giving you the financial results for fiscal year 2021 for the second quarter as well as the full-term forecast. This is the table of the contents that I wish to cover. I'll give the major highlights, the first half and second quarter results as well as the forecast for fiscal year 2021. I would like to give you a detailed explanation today.
Please refer to Page 3. Here, the key messages are presented. There are three characteristics I'd like to share with you. The first is the core business, environment and digital. In these businesses, we had a steady performance in terms of revenues as well as orders received. As mentioned here, in the environment-related area, Hitachi Energy business was very strong. Hitachi Energy in October has changed from HAPG to Hitachi Energy. Therefore, we will now be referring to this business as Hitachi Energy going forward.
Order intake was very strong. As mentioned here, for the second quarter, revenues was JPY 253.6 billion year-on-year or 109%. In terms of the orders, it was very strong as well. The Q2 orders was $2.5 billion and the backlog has increased to $12 billion in terms of digital. In July, we have acquired GlobalLogic and showing strong growth for the second quarter Y-o-Y, was growing very strongly at 152%. The EBITDA ratio was very strong as well.
In the next area, for DX, demand was very strong. IT segment remained very strong as a result of the strong demand, showing a record-high operating income. And the operating profit was JPY 112.3 billion, which is the highest ever. For Lumada, on the other hand, it performed very well. The first half revenues was Y-o-Y 138%. Furthermore, there were major contracts received as well. And two represented examples are shown here. For Hitachi Energy, the HVDC interconnection in the Middle East and North Africa to the tune of [ JPY 60 billion ] was received. And ILSA in Spain, maintenance plan has been received for Hitachi Rail to the tune of EUR 736 million.
Now in terms of the business risk, it has come to the fore, there are three that should be mentioned here. The first is the impact on the semiconductor shortage. And as I will explain later, it has had a significant impact on the automotive-related business. Furthermore, in several segments, the soaring material prices is having an impact as well. Steel as well as copper had an impact. Cost is soaring and the impact has been reflected.
Regarding COVID-19, on the other hand, in the Asian region, in the supply chain, the impact has been very strong, in particular in Thailand as well as in Vietnam for automobile as well as consumer electronics. The supply chain has been disrupted because of the stoppage of the factories and parts are in shortage. These businesses risks are becoming larger.
This is likely to continue in the third quarter as well as the fourth quarter. These are major risks. But we will absorb these risks even in this challenging business environment. And therefore, the net income forecast will be maintained. For the five sectors, we are seeing a steady performance as well. I would like to give you a further detailed explanation later. This is the final situation.
Now please refer to Page 4. Now I would like to give you specific information regarding the growth of the GlobalLogic, which has been acquired in July. And please look at the table above. Having entered July for the 3 months in the second quarter as well as to the fourth quarter, the numbers are shown here.
Revenues on a Y-o-Y basis in the second quarter is up 152%. And Q2 to 4 is 134%, as shown on the right-hand side. The DX market growth has been exceeded by GlobalLogic growth. Adjusted operating income is shown on the next line, JPY 7.6 billion for the second quarter and JPY 21.6 billion for the second quarter to fourth quarter. The operating income ratio was 22% and 21%, very high. And EBITDA was JPY 8.1 billion and JPY 23.3 billion, showing strong growth.
In terms of details, we are able to unleash synergies. Vantara in the United States have been collaborating strongly with GlobalLogic. More specifically to the GlobalLogic customers, Vantara's cloud services are being promoted. And for GlobalLogic's customers -- for the Vantara customers, we are also able to propose GlobalLogic business as well.
So synergies is leading to strong growth. We believe that this will be reflected in the results going forward. Now GlobalLogic is growing significantly. Security service company in the United States is also an area that we have seen new business emerge.
And please look on to Page 5. Let me give you further details regarding the Lumada business. From the past, as we have been emphasizing, for this fiscal year, so forecast is shown on the right-hand side, we have remained at JPY 1.58 trillion. And it's around JPY 1.6 trillion overall. And compared to previous year, growth of 38% has been shown in the first half. But on a full year basis comparison, growth is expected to be 42%.
Please look at the right-hand side for the details of the related business. In this area, power grid acquisitions as well as Hitachi High-Tech integration have made significant contribution inorganically. The Industrial Products business and Smart Life & Ecofriendly Systems has led the organic growth. GlobalLogic has now been acquired. And integration with the High-Tech has made a significant contribution. Breakdown is shown below. 37% is accounted for by IT and next is Mobility, 16%. Overseas ratio is now 49%. This is impact of the GlobalLogic. But half of the Lumada business is now generated overseas.
Now please look at Page 6. Here, I would like to give you the impact of the factors in the market. The factors having an impact is semiconductor shortage; soaring material prices, such as steel and copper; lockdown in Asia region due to pandemic disruption; and logistics and other. And the impact is shown for each of the businesses.
In terms of semicon shortage, Hitachi Astemo has been affected the most. Obviously, it has been impacted by the parts shortage. But OEM orders is likely to decline. Therefore, the most significant impact is felt in Hitachi Astemo. In terms of material prices, let's look at Energy. There is a strong impact in terms of electrical steel sheet leading to cost increases. For Smart Life, in terms -- the impact has been felt because of material prices. And in terms of copper, it's having an impact on wire harness for Hitachi Astemo.
Regarding the pandemic disruption to the supply chain, Astemo is being impacted because of the decrease in parts supply in India. Furthermore, in terms of logistics and others, Energy is being impacted because of large equipment. And the gray area are the areas that have been impacted significantly. The actual amount in terms of the impact will be shared later. This has continued in the first half and is likely to continue in the second half. Based on that, we have concluded the results. So that is the basic result.
And now let me give you further details regarding the numbers from Page 7, which is for the first half. Please refer to Page 8, left-hand side, the revenues and the middle is adjusted operating income. In terms of revenues, Y-o-Y basis, 29% increase has been recorded. This is because of market recovery as well as the power grids business and GlobalLogic and Hitachi Astemo, increased by 29% in terms of revenues, reaching JPY 4,832.6 billion. Adjusted operating income on the right-hand side is 1.6 point increase on a Y-o-Y basis increase in income and increase of 72% from the previous year has been recorded at JPY 310 billion in terms of adjusted operating income. So we have had increase in revenues as well as the increase in operating income.
Major items are listed on the right-hand side. Overseas revenues was JPY 2.92 trillion, Y-o-Y plus 52%; Lumada business, JPY 676 billion, Y-o-Y increased by 38%; EBIT, JPY 425.4 billion, Y-o-Y JPY 39.2 billion; and the net income was JPY 322.4 billion, increased by JPY 71.6 billion; EBITDA, JPY 689.2 billion, increased by JPY 76.6 billion; cash flow, this declined by JPY 53 billion at JPY 161.4 billion. This is because of a tax increase last year.
The chemicals as well as diagnostic business was sold. And therefore, profit was posted last year, but taxes will have to be paid this fiscal year. The tax increase is reflected here. In terms of interim dividend, it will be JPY 60 per share. This is an increase in dividend payment. Last year was JPY 50. For the first half, therefore, compared to that, year-on-year basis, it is a JPY 10 increase.
Page 9, please. Results by five sectors, Astemo and listed subsidiaries that are shown here. As shown in above, five sectors' revenues and profit increased due to market recovery and the acquisition of power grids business and GlobalLogic. For Astemo, Honda's three parts companies have been integrated, therefore, increase in revenues as well as profits. For the listed subsidiaries, Hitachi Construction Machinery and Hitachi Metals, had an increase in revenues and profit. The results were very strong.
As you can see in the middle, you can see the adjusted operating income for the five sectors was increased by -- the ratio was 7.5%, 3% and 5.7%, respectively, for five sectors, Astemo and listed subsidiaries. They were all positive for a total of 6.4%. As you can see here, for EBIT, which is the third line from the bottom here, on a Y-o-Y basis, minus JPY 101.5 billion is shown here. Last year, Hitachi Chemical was sold. Therefore, this is a backlash from the previous year. And at the very bottom, net income, on the right-hand side, the total was JPY 322.4 billion, compared to last year, increased by 29%.
Page 10, please. Here, over the next 3 pages, I would like to give you the results by the business segments in detail. Page 10 at the very top is IT. At the very top, revenues was JPY 976.6 billion. And this is the record high in terms of JPY 112.3 billion for the AOI as well. Look at -- please look at Energy next, JPY 675 billion and adjusted operating income was minus JPY 0.8 billion, on a Y-o-Y basis, increased by 169% and JPY 6.2 billion increase, respectively, increase in revenues as well as operating income.
Hitachi Energy is shown below. The revenues was JPY 518.3 billion. The adjusted operating income, JPY 27.2 billion and operating ratio is 5.2%. As mentioned on the right-hand side, the materials, having a cost increase is having an impact. On a full year basis, this 5.2% will be increased -- recovering to around 6.6%. Y-o-Y numbers should be 222% of our revenues and JPY 12.5 billion for adjusted operating income, which means increase in revenues as well as profit have been recorded.
Industry is also very strong. JPY 393 billion in terms of revenues, adjusted operating income, JPY 25.5 billion. And Y-o-Y basis, revenues, 108%, AOI has increase by JPY 11.5 billion. So increase in revenues as well as the profit. As you can see on the right-hand side, JR Automation in the United States have contributed significantly to this business.
Furthermore, in terms of Mobility, increase in revenues and profit has been recorded, JPY 709.4 billion in terms of revenues, adjusted operating income, JPY 44.9 billion. And on Y-o-Y basis, 132% in terms of revenues, AOI was JPY 5.1 billion. Increase in revenues as well as profit was recorded. What is noteworthy is Railway Systems. For the Railway Systems, it was JPY 287.9 billion and JPY 6.7 billion in terms of AOI, which may look small. But on a full year basis, it will recover to around 6%.
Smart Life. This is the only area that was a decline in revenues as well as profits. In terms of numbers, revenues was JPY 511 billion and adjusted operating income of JPY 36.2 billion. Revenues on Y-o-Y basis is 84%, AOI minus JPY 9.8 billion. There are special factors that are underlying these numbers. For the segment, as you can see on the right-hand side, diagnostics have been sold to Fujifilm. That is leading to a decrease in revenues. In terms of [ High-Tech ] 60% for the consumer electronics business has led to a decline. Therefore, in terms of Smart Life, we have recorded a decrease in revenues as well as profit.
Page 12. Hitachi Astemo business is shown here. It has been impacted by the semiconductor shortage. But compared to the previous year, overwhelming recovery has been made. In terms of revenues, JPY 755.9 billion, adjusted operating income, [ JPY 22.3 billion ], revenues, 234%, AOI, JPY 41 billion. Therefore, with the Honda parts integration has had a significant impact, leading to increase in revenues as well as profit.
Hitachi Construction Machinery is recovering strongly as well. On a Y-o-Y basis, 131%, adjusted operating income of JPY 27.1 billion, recovery has been made. Hitachi Metals also made a significant recovery, Y-o-Y basis, 134%, plus JPY 27.6 billion, significant recovery has been recorded. As you can see in the first half, as I mentioned, Smart Life, the divestiture has had a negative impact. But otherwise, in all the businesses, we have recorded increase in revenues as well as profit.
Please look into Page 13. This is a comparison of the first half of last year and this year in terms of revenues as well as adjusted operating income. The items are the same. Please refer to the revenues. Last year was JPY 3.76 trillion. Power grid business acquisition has added JPY 264.6 billion; Hitachi Astemo integration increased by JPY 418 billion; GlobalLogic acquisition, JPY 34.4 billion; and foreign exchange impact will be JPY 133.5 billion because of the strong movement in yen. And leading to revenues of JPY 4.832 trillion. And operating income has also followed suit, leading to JPY 310 billion.
Page 14. Revenues by market is shown here. Starting with the North America, Europe, China and Japan, ASEAN, India, other areas, and other areas are shown here. What is noteworthy here is the number in the circle, which is showing the growth year-on-year. For North America, 54%; Europe, 53%; China, 47%; for Japan is slowing at 4%, almost flat; ASEAN, India, other areas, plus 61%; and other areas of 42%. And therefore, there is delay in Japan, but the overseas market has been recovering very strongly. And below, the overseas revenues was JPY 2.92 trillion and accounting for 60% of our business today.
Please look at Page 15. Financial position and cash flows are shown here. As you can see in the gray area, the balance sheet is as of September 30, 2021. So it is not that much yet. So it is an interim result that I would like to emphasize. Total assets should be referred to. As of the end of September, JPY 12.879 trillion has been recorded. This is an increase of JPY 1 trillion. This is because of the acquisition of the GlobalLogic.
The increase is financed by the interest-bearing debt, which is around JPY 3.3 trillion, on a net basis, increased by JPY 916.2 billion, which was funding for the acquisition of GlobalLogic. As a result, the total assets has increased to JPY 12.9 trillion. D/E ratio was 0.54x, increased to 0.7x now, but with the cash flow from operations, will lead to decline to around 0.5 by the end of this fiscal year. Cash flow is shown below. And cash flow from operating activities increased -- decreased by JPY 53 billion. This is because of the tax payment. So that is all for the first half.
Next, I'd like to talk about the second quarter. Next 2 slides are just on quarter 2. So Page 17, please. This is the slide for second quarter only for five sectors, Astemo and listed subsidiaries. As you can see in the top, the content is similar to the first half. Five sectors, our revenue and profit increased due to market recovery and the acquisition of power grid business and GlobalLogic. Astemo also increased both in sales and profit. And listed subsidiaries increased in both revenues and profits.
And now the adjusted operating income ratio, 8.5% for five sectors, 2.7% for Astemo and 6.9% for listed subsidiaries, total 7.3%. Below that, EBIT is JPY 206 billion, which is plus JPY 132.3 billion on a Y-o-Y basis. This is because the overseas home appliances is sold to Arçelik. At the bottom, you can see the net income. Far right, please, JPY 200.2 billion. On a year-on-year basis, it's plus JPY 172 billion.
Page 18. This shows the second quarter highlights of the numbers that I just explained, vertical axis: IT, Hitachi Energy, Buildings, Railway, Hitachi High-Tech and Hitachi Astemo. They have large portfolio, so only the large asset businesses, we extracted the large asset businesses. So one characteristic point is, on the far right, adjusted operating income. You can see three in parenthesis, which is IT, Hitachi Energy and Buildings, so minus JPY 1 billion, minus JPY 4 billion and minus JPY 500 million. So the raw material procurement is the big factor.
But on a full year basis, as mentioned earlier, IT and Hitachi Energy and Building Systems, they've all increased in revenue and profit. So this is only the second quarter. And the reason is on the right side: IT, lockdown, mainly in India, and investment restraint of customers in transportation field and other factors. And for adjusted operating income, there's GlobalLogic acquisition-related amortization. But excluding that -- but including that, we will look like this in the second quarter.
And Hitachi Energy, minus JPY 4 billion for second quarter. This is because of the soaring raw material prices. That is a big factor, and Building Systems also impacted by the raw material cost increase. So this cost increase impacted the second quarter heavily. Let's turn to Page 19. We will talk about the highlights of full year fiscal year 2021.
Page 20. Revenues on year-on-year basis, 11% increase. Compared to the previous forecast, it's 2% up. That is about JPY 200 billion. JPY 8.7 trillion is now forecasted at JPY 9.7 trillion. And adjusted operating income also increased on a year-on-year basis, plus JPY 227.8 billion. However, Astemo profit will decline somewhat. And so compared to the previous forecast, it is down by JPY 17 billion. I will talk about Astemo in the following slides. So the sales -- both revenue and income is up, but JPY 17 billion decline in the adjusted operating income compared to the previous forecast.
Now EBIT, JPY 820 billion, no change from the previous forecast. And net income, JPY 550 billion, no change from previous forecast. EBITDA, amortization had some adjustment, so down by JPY 18 billion compared to the previous forecast, JPY 1.352 billion. And the cash flow from operating activities, no change. Core cash flows, free cash flow, no change. And ROIC, 8.1% -- up to 8.1% now.
In addition, there's the FX rate in the first half. We used the actual rate. But for the second half, as you can see here, dollar assumption is JPY 105 to the dollar, JPY 125 to the euro. This is budgeted. And yen will continue being weak. So for JPY 1 depreciation, the FX sensitivity is listed here. This is the sensitivity only for the second half. For dollars, if yen depreciates by JPY 1, revenue goes up by JPY 10.5 billion, adjusted operating income up JPY 1.5 billion and euro revenue and operating will be up by JPY 4 billion and JPY 0.5 billion, respectively. So JPY 10 billion impact in the second half is anticipated.
Next, Page 21. So the three categories: five sectors, Astemo and listed subsidiaries. The text at the top is the same as the second quarter. Five sectors, we had the acquisition of power grid business and GlobalLogic, so revenue and profit increased. Astemo, both revenue and profit increased. And listed subsidiaries, same, revenue and profit increased.
Now adjusted operating income ratio: five sectors is up to 8.7% now; Astemo, 4.4%; listed subsidiaries, 5.8%. Y-o-Y improvement of 4.1 percentage points and total 7.5%. At the far bottom, net income, this is JPY 550 billion, plus JPY 48.3 billion.
Next page -- 3 slides from here shows the business segments' full year forecast. IT. So I explained the first half on Page 10 and the second quarter on Page 18. So there are some differences. But please refer to Page 10 and Page 18 and compare as we go.
First, IT. In full '21 forecast, revenues, JPY 2.2 trillion, and adjusted operating income, JPY 263 billion, 12%. Revenues on year-on-year is 107%, but minus JPY 6.4 billion in adjusted operating income. On the right side, you can see the dynamics. There's no change from the previous segment forecast. But this minus JPY 6.4 billion is due to the GlobalLogic, amortization, PPA and the integration. So including that, the adjusted operating income is negative JPY 6.4 billion. So this PPA and -- excluding PPA and integration, we are both increase in revenue and operating income.
Next is Energy. JPY 1.320 trillion revenue and JPY 30 billion AOI and Y-o-Y is 119% and plus JPY 77 billion, respectively, no change from the previous segment forecast. And you can see the expected Energy revenue, JPY 1 trillion, adjusted operating income, JPY 66.7 billion, so 6.6%, this -- we are up to 6.6% now. Right side, revenue year-on-year of 140%. And adjusted operating income, plus JPY 34.5 billion. And below that, you can see related costs. This is the PPA, the amortization and the structural reform costs total JPY 71.7 billion. So we carry this large amount and still generate this much profit.
Next, Page 23, Industry. So adjusted operating income, JPY 69 billion, and on a year-on-year basis, 102% and JPY 23.4 billion. So both revenue and operating income increased, and no change from the previous segment forecast. JR Automation is the positive factor here. Mobility, here, we made an upward revision from the previous forecast, about JPY 70 billion upward revision in the revenues. For fiscal year 2021, in operating income, JPY 102 billion, 7.7%, year-on-year, 110% and plus JPY 27.2 billion. So compared to the previous forecast, we revised our revenues upward.
Next is Railway Systems. Adjusted operating income, JPY 34.2 billion. This 6% -- we're up to 6% operating income ratio now. And Smart Life, for the entire segment, as you see on the far right, no change from the previous segment forecast, adjusted operating income, JPY 97 billion, and right side, Y-o-Y, revenue, 80%, and adjusted operating income, plus JPY 17.6 billion. As I said earlier, this is because of the diagnostic imaging-related business sales. So that is why we have 80%. But that was already incorporated in the plan, so no change from the previous segment forecast.
Next, Page 24, Astemo, Hitachi Astemo. Adjusted operating income, JPY 68 billion, and Y-o-Y, 156% revenue, AOI, plus JPY 33.2 billion. So both sales and revenue and operating income increased. This has increased from previous year, but a downward revision from the segment forecast, JPY 60 billion in revenue and JPY 29 billion in adjusted operating income. We will talk about the full year numbers again later, so I will talk about that later.
Next, Hitachi Construction Machinery is recovering. On a year-on-year basis, revenues, 113%, and adjusted operating income, JPY 41.3 billion. This is a big upward revision from the last previous forecast. In Hitachi Metals, Y-o-Y, 121% in revenue and adjusted operating income, JPY 38.9 billion, so upward revision, big upward revision from the last forecast.
Next, Page 25, please. This is the full year forecast in the same way compared to FY 2020. You can see the step charts, so revenues and adjusted operating income, and the items are the same. So I will only talk about revenues. So last year was JPY 8.729 trillion. Power grid is added. Hitachi Astemo is added. GlobalLogic is added. Foreign exchange factor and other adjustments, for example, diagnostic imaging-related business, sales and other negative factors were adjusted and total JPY 9.7 trillion.
Next, Page 26, please. Now net income attributable to Hitachi trend. Far left is the adjusted operating income, JPY 723 billion. This is the starting point and then net gain on selling Hitachi Metals shares. And then structural reform expenses is negative and other adjustments. EBITDA -- EBIT is JPY 820 billion. And then interest and income taxes, JPY 180 billion. This seems small than normal. But as you see, we utilized the tax benefits to sales of Hitachi Metals shares. So we transferred -- so it is a deemed dividend. So we were able to take steps that is not the normal taxation. And then noncontrolling interest, and net income is JPY 550 billion.
And the appendix for each sector. Page 28, IT. On the far right, you can see the FY 2021 forecast. And on the far right, you can see previous forecast comparison, how the full year forecast looks like compared to the forecast. So as you can see, IT full year forecast is JPY 2.2 trillion revenue and adjusted operating income is JPY 263 billion. In the far right, you can see the comparison of the previous forecast, it is in line with the plan, in line with the forecast.
So in the same way, please look at Energy next page, 29. So the full year forecast, revenue is JPY 1.32 trillion and 100% compared to the previous forecast, no change. And adjusted operating income, no change. So this is also going in line with the forecast. Hitachi Energy is second from the bottom, no change here. But the key point is compared to the previous forecast, JPY 1 billion increase, but basically no change.
Next is Page 30, Industry. Here again, both revenue and income are increasing. But on the far right, previous forecast comparison, 100%, so no change. And adjusted operating income, plus/minus 0, so no change here. We are in line with the plan.
And Mobility, Page 31. So basically, no change, but the increase in revenue, so revenue Y-o-Y, 110%. And previous forecast comparison, 106%, so it is slightly above the plan. But adjusted operating income is no change, in line with the plan.
Next, please, Smart Life. Revenues full year forecast, JPY 1 trillion and Y-o-Y 80%. So this revenue is a decline. However, compared to the previous forecast, it was already incorporated in the forecast, so 100%, no change. And adjusted operating income, no change from the previous forecast.
And Page 33, Astemo, Hitachi Astemo. As I mentioned, adjusted operating income, second from the top, JPY 68 billion in fiscal '21 forecast. And on Y-o-Y, it is 32 -- JPY 33 billion up. But compared to the previous forecast, it is down by JPY 29 billion. And Hitachi Construction Machinery, FY '21 is JPY 920 billion, 113%, JPY 73 billion, plus JPY 41.3 billion and plus JPY 12 billion. And Hitachi Metals, JPY 34 billion, plus JPY 38.9 billion, no change from the plan.
Thank you very much. That concludes my presentation.
Thank you very much, Mr. Kawamura. We would now like to take questions. [Operator Instructions] Please note that the video of the person asking the question will not be shown. We will first take questions from the media on the Japanese channel, then the questions from institutional investors as well as analysts on the Japanese channel and then English channel. So the floor is now open for the media on the Japanese channel.
I have two questions. First question is regarding Page 6, the impact of the business in the matrix in terms of semiconductor as well as material prices and logistics and lockdown. What is the actual amount of the impact for each of the different areas?
Please ask the second question as well.
Now you said our environment and digital business is really very strong. Digital is probably growing in terms of the Lumada business. But what about the environment business? Do you have the numbers to illustrate this? For your environment business overall, what is the profitability in the recent past?
Now regarding your first question, regarding the impact of the various factors such as semiconductor, will be responded by Mr. Kato.
Now regarding the business environment on Page 6, the most significant impact is semiconductor shortage as well as material prices. Overall, the pandemic lockdown as well as logistics impact was relatively small. And therefore, in terms of semiconductor shortage as well as the soaring material prices, the rough numbers will be presented. For the semiconductor shortage, the most significant impact was felt in Hitachi Astemo. For automobile OEMs, semiconductor procurement is in shortage. On our part, we are also purchasing semiconductors.
In terms of scale, for the annual amount, it's around JPY 180 billion in terms of revenues. In terms of profit, JPY 7 billion is the impact. Obviously, we are trying to make improvement of the situation. The plan numbers are not being impacted significantly. But those are the numbers impacting this area. Next, material prices for steel as well as copper, the annual amount is the following, inclusive of the improvement measures, on a net basis, the impact will be JPY 80 billion. For the first half, JPY 45 billion is the impact.
Now to your second question, currently, in terms of environment, we don't have the profit number for this area specifically. But there are three environment-related business. First is the Energy. With the power grid, the transmission network can be improved. Renewable energies will be supported. And basically, all of these businesses will contribute to environment. So Hitachi Energy will have a significant impact.
The second area is Hitachi Railways. Compared to airplanes, the CO2 emissions is significantly lower and electrification is also being introduced. And most of the orders received are environmental areas. And third is Astemo. The internal combustion engine is the mainstream now, but EV is receiving a significant investment today. This will have a significant impact on improving the environment. So these three businesses will -- is making a significant contribution in terms of the environment.
Furthermore, within our company, by 2050, complying to Japanese objectives, CO2 or carbon neutral will be achieved by 2050. In 2030, on the other hand, or in 10 years' time, in Hitachi's -- first of all, the group companies, we are going to achieve carbon neutral. So in 10 years' time, the CO2 gases will be reduced to 0 from Hitachi and the group companies. And half will be accounted for by renewable energies.
The remaining half will be by transformers, [indiscernible] motors and compressors, there will be some improvement -- will be some improvement as well as pumps will be improved as well. And compressors will be increasingly introduced to achieve this objective. Lighting is also having an impact. We will have increasing use of LEDs. Therefore, inside the company in 10 years' time, we have an objective to achieve improvements. That is all.
I would also like to give further information. Page 1, the environment-related business numbers are presented here. For Hitachi Energy, in terms of orders received is shown here. Compared to previous year at the level of 116%, HVDC as well as transformers are driving this improvement. Furthermore, in terms of revenues compared to previous year, at 109%. Therefore, very strong demand is shown in this area.
I have a question -- I have a confirmation to make. Firstly, you said that the orders are increasing. So there is room for further improvement. Is that the correct understanding? And regarding amortization, it's going to be negative. But going forward, Hitachi Energy orders increase as well as revenue increase. Do you think that the negative factors can be absorbed in 1 year's time?
Yes, that is a correct understanding. Currently, it's only 2 years, so in terms of amortization as well as cost is increasing. But revenues are increasing, so therefore, we will be able to absorb these costs. Orders are increasing, but this is not reflecting in the P&L. This is because of the pandemic impact. Especially in the European trend, there is a logistics delay. And capacity utilization is not at peak yet. When we come out of the pandemic, orders will be reflected increasingly in the P&L. Therefore, that is the direction we are pursuing. Your understanding is correct.
When will it be reflected in the P&L?
Well, it depends on the COVID-19 situation. It is likely that it will be difficult within this year. For next year, there will be some subsequent impact as well. But from about this time next year, I believe that the backlog of orders will be reflected in the P&L. But the external factors is very significant, therefore, I cannot give you a specific timing. But I think within 1 year, we would revert back to that level.
Next, Mr. [ Hiraoka ].
So the semiconductor shortage and the raw material cost increase are my questions. So starting with the chip shortage, when will this continue and the raw material increase, this raw material and chip shortage? Please give us some examples of the countermeasures you're taking. And the second question, this year, with the semiconductor shortage, the company -- this will push down the company-wide profit. But in the 2- to 3-year span, with the semiconductor shortage, the semiconductor inspection machine demand will grow or because of the shortage, the logistics and the supply chain reform your Lumada and your GlobalLogic solution, demand will rise to improve the logistics?
Is that anticipated? And with the raw material increase, the construction material will increase. So if the shortage and the raw material cost increase continues, how will this impact in your company your group-wide profit?
The first one, about the semiconductor shortage. It's hard to tell how long this will continue. I talked with Astemo. The third quarter is a bigger problem than the second quarter. That's their estimate. Astemo is interacting with customers, so they understand the customer situation and that is the judgment they have. This is not just a one-off supply and demand imbalance. There is a structural problem, like U.S. and China problem.
So China is now reducing the inventory or restraining new investment. All these structural problems are behind it. So it's not going to recover very rapidly or resolved rapidly. But the semiconductor production is now increasing around the world. And so we will see this impact by the end of this year. But from this time next year, the supply and demand will loosen, will not be as tight. And Astemo has used that as a basis of their business plan.
Now raw material outside of semiconductor, some items are more serious. For example, steel, steel, iron ore and coal, this is abundant in Earth. So can be -- the production can increase. But copper is difficult. Because copper mine is limited around the world, and there are no new copper mines. On the other hand, with the electrification, demand is soaring. So the supply and demand will continue being very difficult, very tight.
So for -- on an item-by-item, we have to look at this individually how the impact turns out. Copper problem will take time to be resolved. So how we deal with it is, for semiconductor, we need to diversify the supply source. So we are dealing with suppliers that we did not have business relations before. And for new investments, Hitachi High-Tech and others are now trying to start new investments. So those are the measures we're taking.
Raw materials side, it's about how we procure. First of all, long-term stable -- stability is important. And when demand increases, we will try to procure on a spot basis. But if the price remains at a high level going forward, we need more fundamental measures. We are taking -- studying various aspects now. And second point about the semiconductor shortage and the raw material cost increase, maybe we can do more business in these circumstances. Of course, that is the case. So it's difficult, in the first half, cost increases. But in the second half, we do business. And so how much we can offset is the key.
One analogy is in the second quarter, if you can see the financial performance of the second quarter, as Kato-san said, it has a great impact on us. But we absorbed it and generated profit. So the supply shortage is a big negative impact. But how -- I think the momentum to conduct business is a stronger factor, we think. But how much impact on our business, it's hard to say, it's hard to quantify. But that is our macroeconomic view. Thank you. I hope this answers your question.
So you talked about medium to long term and I'm talking about short term. Sorry about short term, but semiconductor manufacturing equipment, Hitachi High-Tech in the Smart Life sector, the first half order is very strong. On a year-on-year basis, it is 152%, of which semiconductor-related nanotechnology solution order is 317% year-on-year. And so right now, the order is extremely strong.
Next, [ Yamakata-san ], please.
I have two questions. First question is regarding shortage of semiconductors. I have a detailed question. Regarding the IT segment, there is impact of the semiconductor shortage. Specifically, where is the impact going to be, in what way? In September, the digital agency has been established, centering on the IT segment. What kind of profitability increase can be expected from the digital agency establishment?
Regarding semiconductor and non-IT segment storage installation, so Mr. Kato will respond.
I don't have the specific numbers. But in terms of products, according to the materials, Page 10 should be referred to. This is for IT segment. And service and platform should be referred to. For storage products that is using semiconductors, there are products that [indiscernible] are also using semiconductors. So these are the areas that will be impacted. For the first half, hardware sales has declined year-on-year.
To your second question regarding digital agency. We are watching the situation very carefully. With the digital agency established, there's going to be significant change. As I discussed in the media, My Number card enhancement or the function enhancement is being contemplated. With added functions, it could be very promising. My Number card has been promoted by Hitachi over the years. And My Number and the Financial Services extension with the insurance business could be very promising for us. So we hope that we can capture this business going forward.
Furthermore, the IT or DX will be promoted to the additional agency. So beyond the My Number question, the horizontal connectivity as well as data sharing are areas that we could provide services. We believe that we can come to business in this area. In terms of data management, we have Lumada. Therefore, we hope that we can capture more businesses in this area going forward.
We have many hands, but in the interest of time, we would like to move to the institutional investors and analysts for this time. Next is Japanese channel institutional investors and analysts question. [Operator Instructions] First is Mr. Ezawa.
I have two questions. The first half results, compared to your internal plan, was it upside or a downside? If you could break down and show us where you exceeded and fall short, there are many, but the main segments, please?
The raw material cost issue and the foreign exchange were different from the original plan, I think. So if you could give us the details to understand -- so that I can understand the real actual business. So the main segments, please? So that's my first question.
Second question, your full year forecast on a consolidated basis is revised downward. Profit is revised downward. So what were the factors that bring the second half down? And what are the upward -- upsides, positive and negative factors?
So first, the first half, BU by sector, Mr. Kato will explain.
So first half revenue consolidated against plan was JPY 80 billion in excess. Foreign exchange was JPY 60 billion-plus. And other and FX, it was JPY 20 billion-plus. So that was revenues, of which five sectors is the majority, JPY 83 billion increase. Astemo, minus JPY 33 billion, so that was down. And the listed subsidiaries, plus JPY 30 billion. The five sectors breakdown is of the JPY 83 billion, FX is about half and the other factors are half.
Now by sector, the ones that exceeded was Energy, HAPG, the Hitachi Energy order is very strong and revenue is growing, as I mentioned earlier. So thanks to that, it is showing a strong growth. And Industry, here again, system and products, we do all the businesses, the market is recovering in general. And there was some front-loading from the second half. In revenues, Mobility, especially buildings, in China, the escalator, elevator business is growing in China. So that is showing a strong growth.
So of the five sectors, these three, revenue grew very strongly. Now operating income, overall, Hitachi consolidated, JPY 10 billion-plus, of which foreign exchange is 50% and the other 50% is organic factor. Five sectors is JPY 10.5 billion. Astemo, minus JPY 13 billion so that was a shortfall. And the listed subsidiaries, JPY 12.5 billion-plus. Now five sectors, as I said earlier, Energy, Industry and Mobility are about the same size. So total is JPY 10 billion-plus. So revenues grew. In buildings, the raw material cost increase was a negative factor, but profit was a positive.
On a full year basis, so macroeconomic view, if you could look at Page 33, please. So as Astemo at the very top, on the far right, you can see the previous forecast comparison, minus JPY 29 billion in adjusted operating income. So this is the full year, JPY 17 billion, so this is the majority of the reason we will have negative JPY 17 billion overall. So JPY 10 billion, remaining JPY 10 billion, we will recover with the other sectors. And we will keep the negative at JPY 17 billion. And the foreign exchange is another factor. So the key is how much of the JPY 17 billion we can absorb. So that is our challenge in the second half.
And one more additional piece of information. So downside risk is the semiconductor shortage and the raw material cost increase. But the positive factors are the market recovery. So we are anticipating market recovery. At this moment, we are seeing this recovery. So if it exceeds our estimate, it can be a positive impact, positive factor.
The next, Yoshizumi-san, please?
I have two questions. Regarding orders for the five sectors, for the second quarter, what is the growth rate year-on-year? Please elaborate. Second question is regarding material shortage. What is the actual amount? You mentioned for semiconductor, on an annual basis, profit basis is about JPY 70 billion.
But if you look at the second quarter only, what is the impact of semiconductor? And what is the impact of the material shortage in terms of profit? You said that in the third quarter, the problem will become more serious. So what is going to be the impact assumed for the third quarter?
Regarding the second quarter orders...
Orders will be covered first for the second quarter. Let me explain. For the second quarter, year-on-year basis on a Hitachi consolidated basis in terms of results, in terms of orders, 116%, 1-1-6 percent. And foreign exchange as well as other M&A adjustment will be made resulting in 106% for the second quarter, year-on-year basis.
By segment, let me give you the breakdown. Increase has been seen in Smart Life, 109% -- 119%. As I mentioned earlier, High-Tech is having an impact, very strong at 170%. The next is Mobility, 103% overall. But for Building Systems, Chinese businesses remain very strong at 119%. For Industry, the overall is 100%. But for hardware product is 120%, remaining very strong.
In terms of semiconductors, as Kato-san has already mentioned today, adjusted operating income basis for the first half, JPY 20 billion is the negative impact. For the second half, impact of JPY 50 billion. And so the overall impact is JPY 20 billion for the full year. And JPY 20 billion in the first half will increase to JPY 50 billion impact in the second half.
Therefore, I said that 3Q and 4Q is going to be stronger in terms of impact. And overall, a negative impact for the full year is JPY 70 billion. But I cannot give you a breakdown for the third quarter and fourth quarter. But third quarter is going to be having a stronger impact compared to the second quarter.
Follow-up, regarding IT and Energy, please elaborate the growth rate for Industry. You said it is flat, which doesn't sit well for me. I thought it was going to be stronger. Is this being impacted by the material shortage? Is that the case?
Regarding IT, year-on-year, 94%. It has been adjusted. The full GlobalLogic is not included. And therefore, this is based on conventional basis. For Energy, 69%. The newly included business is not included. For Industry, I mentioned products earlier. But on the other hand, for Industry business unit or IT business, compared to previous year is at 88%. For product per se, it's growing by 20%. However, the other areas is declining year-on-year.
IT, minus JPY 6 billion, can you comment about that? I thought it was going to be recovering. Revenues was -- could be subject to backlash. But I thought that orders will be improving.
Regarding the front side, we are seeing growth. But in the hardware, as mentioned in our explanation, in terms of storage as well as servers, this has been impacted by the shortage in semiconductor, therefore, declining, overall deterioration. For the front side, financial business unit as well as the social business unit are 101% to 113%, respectively, growing year-on-year.
Next, Mr. Okawa, please.
I have two questions. First is Hitachi Astemo, some detailed questions. The first quarter and second quarter, the revenue only down by a few percentage points. So this is different from the automotive situation. And for second half, only 3 percentage point increase. So it doesn't seem like it's including the recovery production. So this seems like a different movement from the market. So how should I understand this, so the automotive is the conservative part?
Second question, at the beginning of the year, you said that the adjusted operating income, you will aim for 10% next year. So have you changed your objective after the second quarter results?
Starting with Hitachi Astemo, as I mentioned in the presentation, the OEMs, we have close communication with OEMs when we formulate our numbers. Our main customers, Honda, Nissan, and overseas, Ford and OEMs, they are all reducing their production by 30% to 40%. They've informed us. And the discussion on when this will recover has not been completed.
So based on that, we are bringing -- formulating this number. So it may seem like conservative to you, but the U.S. automotive market may recover faster than expected. Then they will correct, revise the production forecast, which -- in which case, we may be able to present to you a new forecast. But so far, the OEM is giving us very stringent numbers. So that is the basis of our numbers.
And next, what our 10% target looks like now. 2021 medium-term plan, the two 10% is included, adjusted operating income, 10%, and ROIC, 10%. So those two numbers are included. This fiscal year is the final year of our medium-term plan. And it is, as mentioned today, this fiscal year, 10% for both are difficult.
But it depends on the market trend. Next fiscal year, in fiscal '22, we want to achieve the two 10% targets by next year. It will be 1 year later, but we want to achieve. So we are now gearing up the 10% now. We are trying to achieve this 1 year later. Thank you. I hope this answers your question.
From IR, Yoshikawa, I would like to add some more information. Astemo is difficult to understand. There was the M&A integration. So in the first -- like first quarter, this is not necessarily the official number. But the integration -- based on the integration, on a pro forma basis, the second quarter year-on-year is considered. In that case, this number, we disclosed the Honda numbers last year, so this 93%, around 7% decline on a year-on-year basis in revenues.
The Tier 1 in Japan and abroad, the second quarter Street estimate, not everyone has done their financial results briefing, is about now down by 7% to 8% according to The Street. So this is in line with this level of slowdown. On a full year basis, in the Investor Day, we disclosed JPY 1.48 trillion. So this is the previous year pro forma revenue. And this year, we made a downward revision. But on the year-on-year growth is around 4%.
This is still unforeseeable. But the OEM's production status, the other Tier 1 and Tier 2 movement is now declining. So compared to the market, we will keep our close eyes on how we compare with the market. But according to the market data, fiscal year '20 and fiscal '21 are flat in terms of production unit. So growth of 4% in revenue, this may be a bit aggressive or just right.
Harada-san, please?
I hope you can hear me.
Yes, we can.
Two questions. First question is regarding the production constraint in terms of materials as well as semiconductors is constrained. But in addition to that, other materials, such as analog semiconductors as well as resin, even normal products are difficult to procure recently. In your company, have you been impacted as well? In terms of the inventory assets for the first quarter to the second quarter, there is an increase. So it looks as if you are not having a negative impact in terms of production. But it is a mixture of different businesses, mass production could be impacted more significantly. I want to know whether there is any production constraints.
The second question is a long-term perspective question. Renewable energy is likely to take off in your company grid as well as transformers as well as VPP. And other businesses have promising opportunities for renewable energy in 2030 as well as 2040. What kind of market size can you expect -- are you aiming for? Domestically, you have also [ ABB ], therefore, overseas market as well. What kind of business vision are you aiming for in 2030 and 2040?
First of all, regarding the production constraint, there is semiconductor, steel and copper are the constraints and resin as well as derivatives of petrochemical products is also being impacted. But the significant impact is the steel, copper, aluminum as well as semiconductors. So the heavy metals have been impacted significantly. Regarding petrochemical derivatives, we can manage because of the relations we have with manufacturers. Therefore, other than hard metal, the constraint is limited.
Now regarding your second question, regarding the environmental business, this is something that we are contemplating today. In terms of our long-term target, Yoshikawa-san, can you give further details?
This is under consideration today. But in 2016, the environmental vision was formulated. And mid- to long term, the three pillars were identified where we hope to provide solutions. So this is still relevant. And based on that, in May of the next year, in the next mid-term management plan, it will be incorporated.
First is decarbonization, power grid, railway as well as EV, the environmental-related business. Beyond that, the second area is the recycle-based society. And this is elaborated in our sustainability report. The sewage as well as water supply infrastructure as well as desalination of seawater are being pursued. In these areas, we hope to make contribution to society.
Third pillar is major symbiosis promotion. Renewable plastic can be used as well as renewable energy. Our promotion system will be enhanced as a business. Fourth pillar is to utilize the IT platform. The digital channel will be leveraged for all these three areas that I have just mentioned. And this is something that we have been contemplating. And we -- it is still subject to consideration.
Ayada-san?
I have two questions, Lumada-related and Hitachi Astemo. Two questions, please. First, Lumada second quarter revenues. On a like-for-like basis, on the organic basis, how much growth did you see? What was the percentage of growth? In the full year plan, based on the organic basis, what does it look like?
On Page 4, GlobalLogic, second quarter and full year forecast is presented here. So the message here is that the growth of the second quarter in revenues and profit, it seems high, higher than the full year forecast. So your implication is that the second quarter was strong. Are you trying to say that second quarter was significantly strong? So that's my first question.
Second question is about Hitachi Astemo. I understand this year's situation. But the downward revision this year, how will this impact next year? If you could give us some insight. I understand that it depends on the supply chain. But if the recovery in production will gain momentum, then there is not much concern for next year or the integration impact that you are planning now may delay with the various disruptions? A qualitative explanation is fine.
So let me -- Kato-san will explain Lumada, first question.
So Lumada, my numbers here is first half, so let me answer in first half. The overall growth in the first half was 38%. Organic was 14%. It was mainly IT and Industry. IT and Industry were the drivers. And full year, 42% growth is our plan. 16% will be the organic growth, mainly IT and Industry will be the driver. So your second half, GlobalLogic, as mentioned in Page 4, the results and the forecast, the forecast seems conservative.
But the second quarter result was stronger than our internal forecast. It was -- and we had an upside. GlobalLogic, this is a stand-alone number here. But other than that, there is the PPA, amortization and the related costs. If we include those costs, the first year, I did not think, will be profitable. But with this result from second quarter, we are profitable and contributing positively even with those costs.
So let me continue on with Astemo. So the conclusion is fiscal year '21 numbers, this is the bottom. And the reason is this profit -- downward revision of profit, starting from semiconductor, we've taken various structural reform measures. So cost control and price -- passing on of the prices. JPY 40 billion to JPY 50 billion measures have been taken. And this is not a one-off cost. It is will not -- this will not come back.
And therefore, once the semiconductor comes back, this will be positive to our profit. So this operating income will be the bottom. And once semiconductor situation improves and OEMs order comes back, this will be the bottom. And I don't know if we can recover to JPY 90 billion, but we will work hard to achieve that level.
So may I? Lumada, second quarter, we disclosed first quarter. So if you can do the subtraction, you can see the numbers. As Kato-san said, IT and Industry are the drivers in the organic. First quarter, organic growth on the same basis will be higher. And second quarter seems like it's slowing down.
Now stand-alone GlobalLogic growth, as you know, EPAM and Globant, those are the peer comps. Second quarter alone, revenue year-on-year is not that inferior, so the 50s -- in the 50s, it's not inferior. And second point, EBIT, this is different from our AOP. And EBITDA margin level, our stand-alone is better than the two other companies. So PPA and the one-off cost, we have a strong base on a stand-alone basis to able to absorb the PPA and the other costs.
Bolor-san, please.
I have two questions. My first question is regarding Mobility business. Revenue is up and revised operating profit remains flat. For the Hitachi High-Tech revenues are being upward revised and a high-margin business, so operating profit is not changing. Why is this? Is there a room for upside?
Within IT business, the front business is very strong. Lumada and GlobalLogic have experienced upside. These are very profitable businesses. So it seems like operating profit forecast is conservative. That's my first question.
Second question, Mobility business is very good, 19% for buildings. Orders are increasing. What about Evergrande? Is that going to have an impact? Is there a real estate bubble risk? How -- what is take your on that? And do we have to be concerned?
Regarding Mobility, the first one will be answered by Kato-san and I will address the Evergrande issue.
As [indiscernible] mentioned, for the Building Systems as well as High-Tech, in terms of revenues, we have made upward revision, but the profit there is spent for buildings. Demand is very strong, especially in China. That is the reason why we made the upward revision, but there is a material cost increase. That is the reason why we have left the profit flat.
Regarding High-Tech, the revenues are being revised because of the semiconductor production equipment as well as diagnostics. But it's not the [indiscernible] the Industrial Solutions is the reason. In terms of materials and systems sold and revenues in this area, we thought that it is limited in terms of risk. So we will only post the margins. So it looks -- it appears that the revenue is larger. It is not directly linked to profit. That is the reason why there is a disconnect here.
Now regarding Evergrande, in China, when the announcement was made, there was a concern about defaults. And therefore, we had to evaluate the situation. The elevator business in China is very large for us. And therefore, the Evergrande business is not that much. We are selling elevators, so -- but for the -- it can be covered by the profit that we are generating and still enjoy growth.
Therefore, there is no significant concern regarding Evergrande. However, it could go beyond Evergrande and have impact on the whole real estate in China. It could have an impact on credit in China, which is more significant problems. And that is the reason why we are watching the situation very carefully so that appropriate measures can be taken. But Evergrande will not have a significant impact on our performance.
Now regarding IT and Lumada, as you already mentioned, you may expect further profits. Although numbers are not being disclosed, the core business of Lumada is very close to the IT business and profit will converge with the IT business. But for the related business where Lumada will be provided to other businesses, high profit can be expected. Even 15% or 16% can be expected for this area. We see that the data-centric or data utilization based on Lumada will become an important pillar for our business going forward.
It is past time, so -- I still see many hands. I am sorry, we will take one last question. [ Mr. Kitamura ]?
Can you hear me?
Yes.
So this is not related directly to the financial results today, but it's an important point. So the quarterly disclosure, so Prime Ministry Kishida referred to the review of the quarterly disclosure. And this point has been raised a few times in the past. But have you internally studied the pros and cons of this quarterly result? And what is your stance as of now?
Thank you. I am a member of the financial consultation -- a member of FSA and also the member of the financial disclosure. And so we discuss this on a periodic basis. And I'm the representative of the business companies. And from analysts, I hear that in both councils, we hear that this quarterly disclosure is too much. On the other hand, the disclosing side, our company side, today, we are announcing our second quarter results. But in our department, we are discussing and working about the third quarter in the parallel. And so this is a lot of work.
So this quarterly disclosure, we are not a company that mandates this, but we must do it. I think it should be voluntary disclosure like U.S. and Europe. So that is my personal view that I expressed in the council. And we are discussing internally, so for how long we can continue this quarterly disclosure is now being discussed. In a company like Hitachi, we have resource, so we can somehow manage to continue quarterly disclosure.
But there are companies that are facing difficulty on disclosing on a quarterly basis. So it's not just about us, it's about the disclosure and the relationship with the capital market. So we need more discussion. In Europe and U.S., we're seeing some voluntary disclosure. So I think Japan will move in that direction. We don't know the conclusion yet. But that is the kind of discussion we are having with the government and internally. Thank you.
Thank you very much. With this, we would like to bring the earnings explanation for the second quarter of fiscal year 2021 earnings to a close. Thank you very much for your attendance today. [Statements in English on this transcript were spoken by an interpreter present on the live call.]