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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Now it's time to start. The presentation meeting by Hitachi Limited on the consolidated Financial Results for the Year Ended March 31, 2023, and the Progress of the Mid-term Management Plan 2024. Ladies and gentlemen, thank you very much for taking the time out of your busy schedule to attend this meeting.
First of all, CFO, Kawamura will explain the financial results. And then after that Kojima will make presentation on the progress of the mid-term management plan 2024 which will be followed by a QA. As for the presentation materials, they are available from our website, IR site of Hitachi Limited as well as a news release site, please check this website for the materials. Now allow me to present today's speakers. Toshiaki Higashihara, President and CEO of Hitachi Limited, Tomomi Kato, VP Executive Officer, Deputy CFO.
So these are the three speakers who will be presenting today. And first of all, CFO, Kawamura will give you the outline of the consolidated financial results, and please wait a little while to prepare the presentation material.
The floor is yours, Mr. Kawamura.
My name is Kawamura, the CFO of Hitachi Limited. Thank you very much for taking time out of your busy schedules to join us. We appreciate the large turnout for the first 20 minutes. I would like to report on the consolidated financial results for fiscal year 2022 and provide a forecast for FY 2023. If you could please look up page one as the material you'll find the contents of today's presentation. First, I'd like to deliver the key messages. So the financial results, FY 2022 results.
Secondly the financial performance for the year that has ended and then forecast for this fiscal year 2023 that will be the order. Now, if you could proceed to Page 3, there are four key points, key messages. Point number one, if 2022 is announced on a consolidated basis, total revenues was 10.881 trillion, year-on-year 6% increase and our most important KPI adjusted EBITDA was ¥884.6 billion, up by 29.2 billion year-on-year.
And equally important, core free cash flow was ¥416.4 billion, up by 126.3 billion year-on-year. All these targets were met as a result in net here ¥649.1 billion, up by ¥65.6 billion year-on-year. So 649 billion announced the target was 630 billion, so net income overachieved or the target that we had. As stated below, a fourth quarter increased in revenue and income and on page nine details please look at them later.
And number two portfolio reforms and transformation is progressing quite successfully as written. So partial sales of Hitachi construction machinery has been completed, it's down to 25% and so it's fully deconsolidated. Hitachi metal and Hitachi transport us this time our stake is zero right now for these two entities. So there are completely independent of Hitachi and we regarding Hitachi as soon, we made an announcement that our SML image. Our safe goal is to be down to 40% and Honda [indiscernible] will increase their stakes in Hitachi SML newly joined. So because the West Africa 40% it will be deconsolidated it will be an equity method affiliating September 2023. So, portfolio transformation is progressing well.
Number three what to do with our shareholder returns under those circumstances? On an annual basis our dividend payout is 145 interim dividend was ¥70 per share, and Iran's dividend is planned to be ¥75 at the end. And after the results are audited by the auditors, AGM held in May, will determine this officially, but at this moment our year-end dividend plant is ¥75. And share buyback for FY 2023 we collected ¥200 billion of buyback for FY '23, we're considering doing 100 billion which was resolved by today's VOD. So that is the shareholder return we have in plan.
And number four, so what is the full year forecast for FY 2023? The three sectors will be referred to as consolidated with Hitachi, inclusive of SML, we have consolidated businesses as consolidated businesses. So we use this term consolidated businesses, forecast revenue is ¥7,840 billion, 3% increase year-on-year. Adjusted EBITDA plan ¥800 billion up approximately ¥5.1 billion year-on-year. Net income ¥496.0 billion, while down 145.7 billion this is going to be transient. We are transforming portfolios. Net income will see a decline to 496 billion but this is not necessarily relevant to the earnings that we have as part of our BAU. But that was the outline.
If you could please look at page 5, I would like to provide you with details. This is a review of business environment on page 5. As stated in the upper house, a semiconductor shortage in particular for automotive industry is continuing an impact for us. And electricity rates as well as parts or places material prices are also continuing to be high. So semiconductors shorten sorry, material prices, transportation costs, sewing electricity price. Ukraine or Russia was also plotted on the horizontal axis before but after a year, we have been able to have quite a bit of control. There's very little financial impact from the war and so we have excluded that.
Now semiconductors short is at the bottom you can see Hitachi Astemo is major impact. We're expecting recovery but because not much investment goes into semiconductors or for automotive industries. So supply and demand continues to be tight. And so in the material prices, transportation cost is impacting Hitachi customers, especially wire -- electrical steel sheet as well as electricity wires, copper and so forth, the cost is rising, procurement cost as well. And electricity price increases impacting our plants and factories, so especially a business on Hitachi Astemo. Green Energy & Mobility in the middle of the table. In the PowerGrid business, electrical steel sheet supply continues to be tight. So the impact from that is severe that is part of the general business environment.
So if you could please go to Page 6. The numbers I gave you at front broken down here. Please look at the captions, the three factors. This is a review for FY 2022. So we do not use consolidated versus de-consolidated. We still use the term three sectors. So a consolidated results of Astemos and the list of subsidiaries as we have done conventionally now. A ¥10.881 trillion revenue and adjusted EBITDA of ¥884.6 billion its ratio 8.1% to net income, ¥649 billion, EPS ¥684, core cash flow 416.4 that's 7.6%, all targets met.
Please have a look at the 3 factors to the right. Third, from the top, adjusted EBITDA ratio. On a consolidated basis, it was 8.1%. But 3 sectors, it's 9.5%, and below net income, ¥641.7 billion 3 sectors, EPS, ¥676, up by ¥134 per share. Now to the right, please have a look at our Astemo's business. Revenue at the very top ¥1.92 billion, adjusted EBITDA, ¥73.4 billion, so both revenue as well as income increased. Last fiscal year, Astemo was suffering under very severe environment. So revenue as well as profit both increased for FY 2022, but net income is still negative.
As it is in the text, there were one-off losses. So risk sharing pension plan was introduced that was one-off loss factor and impairment occurred. So impairment loss was also included. As a result, Astemo's net income was negative. Net loss was posted on the far right listing subsidiaries, Hitachi construction machinery and Hitachi Metal.
Page 7. No, the numbers on Page 6 are further broken down by sector. There is Digital Systems & Services agreeing, and mobility, Connective Industries at the very bottom. First, at the top Digital Systems & Services, FY 2022 revenue, ¥2.389 trillion, adjusted EBITDA ¥293.7 billion, in terms of the ratio 12.3 percent%. So very high ratio was posted. And on the right, year-on-year, both revenue as well as profit increase for Digital Systems & Services. In particular, Group reported well.
Please have a look at this column. It's going to a high growth. So adjusted EBITDA of ¥45.2 billion, its ratio of 20.3%. You can see that adjusted EBITDA, as well as revenue increasing for GlobalLogic as well. In the middle green energy mobility or revenue 2.492 trillion and adjusted EBITDA 132.7 billion, 40.4% ratio revenue and profit grew. Hitachi Energy in particular revenue 1.413 trillion, adjusted EBITDA 101 billion, 35.7%, revenue 31% increase both revenue and increase grew connective industries.
Revenue 2.975 trillion, adjusted EBITDA 312 billion. So, both revenue and profit grew for this sector as well. Building systems for measurement and analysis systems, if you touch a high tech, they account for a large share within the connective industries. So, for building systems, a revenue 891 billion, adjusted EBITDA 83.6 billion, revenue up 5% adjusted EBITDA ratio 13.8 billion measurement analysis system, so you touched a high tech 674.2% and 92.6 17% up ratio 32.8%.
And Hitachi Astemo, because the semiconductor shortage ¥1.820 trillion of revenue 73.4 billion of adjusted EBITDA. It's a revenue increase by 20% EBITDA ratio 11.1% and the consolidated numbers are at the very bottom.
Please have a look at Page 8. So FY '21 to FY '22. How it has evolved. What is the trajectory between FY '21 to FY '22? At the bottom revenue, rather, at the top revenue at the bottom adjusted EBITDA take a look at revenues. On the far left FY '21, you started off with a revenue of 10.264 trillion and GlobalLogic acquisition impact as opposed to Hitachi construction machinery and Hitachi metal divestiture impact came in and there's Forex impact quite large, which was around 800 billion lifting the number and organic growth was also posted.
So on the far right FY 2022 revenue was 10.81 trillion. And now take a look at the bottom adjusted EBITDA on the far left FY '21 starting with EBITDA of 855.3 billion with the GlobalLogic acquisition impact HCM and Hitachi Metals that were divested and ForEx impact of the plus 73 billion and there were changes in the business scale with positive 7.1 billion resulting in 884.6 billion in FY 2022.
Please have a look at Page 9. So adjusted EBITDA to net income, what is the trajectory? So at the top FY '21 at the bottom FY 2022, have a look at FY '21. On the far left adjusted EBITDA 855.3 billion that was the starting point. With acquisition goodwill was amortized down 76.6 billion and business reorganization 102.1 billion on the right breakdowns and dispatch will be falling expenses are down by ¥43.8 billion, there's interest costs extraordinary against losses and income taxes 168.4 billion which is normal and non-controlling interest 87.3 billion negative and then the result was 583.4 billion.
Now at the bottom FY 2022, adjusted EBITDA was 884.6 billion, there was acquisition related amortization and net gain on business reorganization. So HCM and Hitachi Metals divestiture as well as Hitachi Transport force sales came in as structural reform accessories 139.2 billion as a cost or interest cost 25.6 billion others 113.6 billion. Income taxes 116.1 billion. The rate was 14%. Usually it's 25% but reduction by 10 percentage points because of utilization of DTA and deemed dividend which was not taxed and so tax efficiency rose.
And non-controlling interest net income on the far right 649.1 billion. Please go to page 10. So almost negotiate, this HOVE, national provision and cash flow emigrate in the middle. Please take a look at that column. This goes as of the end of March 2023. So, as of March, the [indiscernible] is fully incorporated and the asset total is ¥12,501.4 trillion, 12,501.4 trillion, that is for total assets. But it's noteworthy is all the way down to the interest bearing bid and at the end of '22. Now the 2,213.3 trillion, so, compared to the previous year end more than ¥900 billion yen this amount has been reduced. So, the borrowed are the processing of the symbols and the return that has already been over. So that has been the negative impact to push up this number and looking at the cash conversion cycle. So 58.1 days, so the ultimate recovery improvement by 28 days.
The Hitachi construction machinery, they have some impact on these days, but now it is on the, not included. So that was positive and also the total, Hitachi limited shareholders equity ratio is up and building up the equity up to the ratio has come up to 39.5%. The ratio used to be 0.58 times at the end of last year. However, both, no we have come down to the listen on the upwind side. Now it is 0.41 time and just flew all the cash flow numbers are improving the operating cash flow 827 which is improvement over ¥97.1 billion and the cash flow from investing activities also improved significantly.
So the right ¥199.9 billion improvement year-on-year and free cash flow also improved ¥978.1 billion. So free cash flow which is the most important and one of the most important KPI is also improving ¥416.4 billion. So the so much so far, I talked about the results of the fiscal '22.
Now, I would like to talk about the full year forecast of 2023. And please take a look at the Page 12, which is a highlight over full year forecast of 2023. At the top, please note some bullet points. So this shows some of the assumptions for this full year forecast. Well, because of the competitive law conservation, it has been delayed, which is about the acquisition of the Thales railway signal related business. We are expecting this to be completed by September. So this will be incorporated in the second half of the year.
Astemo is different So in September, this company will become the equity method affiliate in September this year. So you see, on the left hand side, you see total, the column and then in the middle, continuing consolidated business. So we do not use the 360 businesses, but we changed the naming of the businesses. So in the middle, please take a look at the medium column, continuing to consolidated businesses, revenue ¥7840 trillion, EBITDA of 3% increase here.
And on the left-hand side, you see percentage in parenthesis. This is the number you are seeing, the impact of the foreign exchange, which is 4%. And adjusted EBITDA, ¥800 billion increased by ¥35 billion and adjusted EBITDA ratio 9.5% on the left-hand side. But looking at the continuing consolidated business, it will come up back to double-digit, 10.2%. So this ratio has been improving. And the net income ¥496 billion, EPS ¥529. And looking at the left-hand side, the non-consolidated, it is the ¥4.5 billion. So, altogether, ¥500 billion is the target figure, which we would like to announce.
We are looking at the consolidated -- the column. Core free cash flow ¥310 billion growing 7.5% for the year target that we have set. Exchange rate is moving quite rapidly and that is impactful. On the right hand side at the bottom, you see assumption of ¥130 to the dollar is assumption for the dollar. And the FX sensitivity by the change of ¥1 the positive and negative are the same, but the revenue impact will be ¥13.5 billion, adjusted EBITDA impact is ¥1.5 billion. This is a sensitivity.
Please go to Page 13. So as I mentioned earlier, this is the break on the broken down analysis by sector. First of all, at the top Digital Systems & Services revenues ¥2,450 billion, adjusted EBITDA ¥308 billion, 12.6% which is quite high. Y-on-Y, year-on-year basis, 3% increase for the revenues and the adjusted EBITDA increased by 14.2%. So both the revenue and the profit increased. And then you see the breakdown by the businesses like our front business, IT service and services platform, 9.8%. SO for the services platform, which is not double-digit. But we are making efforts in order to push this up to double digit, we are taking various improvement measures.
Next section, a Green Energy & Mobility are ¥2,580 billion adjusted EBITDA of ¥473 billion. So year-on-year, the increase both in terms of our revenue and the profit. So the ¥25 that trillion of revenue, that is the size of this business. And then you see breakdown by the company. Hitachi Energy ¥1352.5 billion revenue and ¥112.5 billion profit 8.3%.
So there was a risk demand. And we are investing in the facility so that we'll be able to respond to the increasing demand. But we are somewhat slow in terms of the augmenting the production capability to respond to the demand. But there was an increase about the adjusted EBITDA and they are in 28.7 billion. So this includes IT and the acquisition related costs, so ¥28.7 billion for these purposes. Below that resistance, revenue ¥907.3 billion and the adjusted EBITDA is the ¥6.8 billion, 6.38% increased by ¥9.3 billion and increased by 23% for the revenue.
Please go to Page 14, this is about the connected industries. Here, this section, the richest ¥3 trillion, the revenue level, and adjusted EBITDA ¥330 billion, 11% and on a year-over-year basis, so 1% for the revenue and 17.8 billion increased for the adjusted EBITDA, so increasing revenue and profitability.
So they are starting from a building 10% and that is the EBITDA ratio for building and 11.4% for GLS and the 12% for Hitachi High-Tech and 11.6% for industrial results, 11.1% for the environment and 10.9% for the industrial products. In this sector and the EBITDA ratio is double-digit. Looking at the building system, the revenue is down about 6%, it is because of the ongoing adjustment phase of the Chinese real estate market and the High-Tech and the measurement and analysis to minus 1%. It is because last year, it was a very booming year for the semiconductor production equipment and this is because of the repercussions of last year. However, the profits while it is very solid.
And please go to Page 15. This about the affiliated companies, I like to talk about the demo, which is at the top. This only includes first quarter and second quarter only. On the year-over-year will be one half, so 3.6% for the adjusted EBITDA. So the main software, but the business is quite tough due to the semiconductor situation.
Now this is Page 16 shows the trajectory of adjusted EBITDA and revenue, revenue starting from '22 and right on 2023 forecast, adjusted EBITDA, the comparison between fiscal '22 and '23 forecasts. The information difference between year '22 and the '23 is impact of exchange, both in last year '22, the exchange rate was a positive. However, in 2023, in fact about the exchange rate will be negative for both revenue and EBITDA. It was ¥135 to the dollar that was the assumption for last year, but this year, and '23 is going to be ¥130 to the dollar. Adjusted EBITDA far right in the 2023 on the 835 billion.
And the next page, page 17 shows Lumada business. In the circle you see percentage of the adjusted EBITDA from this right you see a fiscal '21, '22, '23, 12%, 14% and 15%. So the profitability is the rising according to the plan and the other revenue are the ¥2.1 trillion that is on the expectation and on the right hand side knew the model business ratio is indicated. So out of the total business, how much no matter business accounts for in total. So on the left hand side, the revenue in 2023 is going to be 29% and nearly 30%. Adjusted EBITDA ways far right, it will go up to nearly 40%. So the absolutely the portion of [indiscernible] business is expanding, and below that you see a bar, which shows the different business competitions of Lumada.
And then we have some the appendix and I'd like to give you fresh 2019. The only focus is upon the first quarter number. And then page 25, a list of great shows the first quarter '22 and in the middle of fiscal '22 who year. So the starting from our revenues are adjusted down the operating income, EBITDA and the adjustments was made, and then it goes down to EBIT the floor. And then the net income is the 649 billion, all right, is the 2023 forecast. And what I like to see is in the middle of fiscal 2022 and others, the adjusted EBITDA and the ¥113.4 billion negative. It is because of the transition of the new pension system.
Page 21 is the reason the revenue by market and the new trends emerging here. I'd like to call your attention to consolidate the total Y-o-Y, why second from the bottom, the how much percentage increases seen in North America 21%, this is from the faster growth. Next to that is Europe 18%. And as a result, at the bottom, you see ratio across these reasons. Japan is lower than 40% mixed and North America 17%. And China 12% right now. So there are some changes on the end reshuffling of these reasons.
Next on the page 22. This shows the oldest results by business segment. '22, on the right hand side, please take a look at the gray on the building systems and the other. You see 16% to 12%, 8% or 28%, so you see increase. Green energy mobility, the nuclear energy and the energy are negative, but the heat of the energy and railway 64% and 65% respectively. So the odor level is quite high for these businesses.
On the right hand side conductive industries and the smart life and also measurement and analysis. So these are negative but all the other businesses are positive in terms of the order placement. This concludes my presentation. Thank you very much.
Our president and CEO, Mr. Kojima will get focused on midterm management plan 2024.
Thank you. So next on our midterm management plan progress. Mr. Kojima will speak, we're going to switch the material over to you Mr. Kojima.
So this is Kojima speaking. I'd like to explain the purpose of midterm management plan 2024. There are three main points I would like to convey to you today. Number one, in view of our FY 2022 financial performance, I wish once again explain how he touched the positions its FY 2024. MMP in to management plan and secondary describe how we're looking to enhance Hitachi's enterprise value to our social innovation business. And primarily to describe the status of our sustainability management to support groups. So let me explain these three points one by one.
First on the position of our FY 2024 mid-term management plan. Following the management crisis in the wake of the global financial crisis, Hitachi made a decision to concentrate on the social innovation business and embarked on a transformation of its business portfolio, with the aim of becoming a global leader in the social innovation business. As a result, as of FY 2022, Hitachi no longer retained any recent subsidiaries and also announced that Hitachi Astemo would be de-consolidated to be an independent company targeting to achieve IPO.
Now that Hitachi has completed a portfolio transformation, for now, we will shift our management focus to sustainable profit growth. MMP 2024 therefore marks an important turning point for us to make a model shift from business portfolio transformation to organic growth and to accelerate efforts to enhance Hitachi's enterprise value under one Hitachi.
Let me briefly review the track record of our business portfolio transformation efforts so far. To expand the social innovation business globally, since 2013, we have acquired necessary assets worth revenues of ¥3.1 trillion. In parallel with that, we have also transferred or divested business assets worth a revenue of ¥5 trillion that we believed would grow even further, if made independent from Hitachi to optimal partners that we have chosen.
Business portfolio transformation drastically globalized by Hitachi's assets. In Europe, in particular, assets were mainly acquired in green areas such as this for electricity and rail, whereas in the U.S. large asset increases occurred in digital, green and industrial domains. Going forward, we will be looking to drive our businesses organically, primarily utilizing our augmented assets in the United States.
On this slide, I will briefly explain about the major acquisitions we have made, including Hitachi High-Tech, Hitachi Energy and GlobalLogic. After their integration and integration is complete for all 3 entities, all of these companies are operating as engine for Hitachi's global growth.
GlobalLogic as colum earlier explained achieved a record high profit in FY 2022, while Hitachi Energy is vastly increasing its order intake helped by a tailwind from the GX market. GlobalLogic is maintaining high growth, benefiting from the tailwind of the GX market, which is growing as well. We are increasing investments into these three companies to further drive growth.
With a great progress made in the FY22022 business portfolio transformation large entities, including list of subsidiaries and Hitachi Astemo will be de-consolidated during the MMP 2024 period. To reflect the impact of deconsolidation, we are updating the major KPIs for MMP 2024.
More specifically, we will subtract the revenues, profits and cash flows of our listed subsidiaries in Hitachi Assemo, from our actual and planned performance for FY '21 through '24 and add equity in earnings from these affiliates after deconsolidation. Of the major KPIs, those on revenue growth, a profit margin ROIC or EPS will remain unchanged, targets for these will be kept. But core free cash flow and shareholder return will be revised reflecting reduction in operating cash flow following deconsolidation and also cash inflow increased from asset sales. For these such changes I will provide you with further details later.
Next, I'd like to discuss how our social innovation business will contribute to enhancing our enterprise value and its strategy. First, let me again explain Hitachi's social innovation business. Hitachi defines its social innovation business as a business that leverages Hitachi's IT/OT and products that are strengths for Hitachi to solve social issues, together with customers.
The purpose of this business is to our data and technology to work with customers to build a sustainable society, supporting people's happiness and quality of life. We will seek to harness the three major trends of digital green and connective that would dramatically change our society and industry. As drivers of transformation to expand our social innovation business in a broad range of areas.
Lumada is a social innovation business customer co creation framework to drive further growth leveraging digital technology. The basic part of the global growth strategy for our social innovation business is to utilize the customer footprint that we have obtained through large acquisitions. Leverage Hitachi's diverse capabilities and to expand Lumada business under one Hitachi.
As I have already described, large scale global M&A have brought about considerable additions to our human resources and customers footprints in different regions around the world. We will put them to full use, so that we can provide together with our customer's solutions to high priority social challenges that each of these regions around the world have faces.
I will now explain where our Lumada business is at this moment given that this is key to elevating our enterprise value through social innovation business. As the graph on the slide shows, expansion of Lumada business is the engine behind Hitachi's overall growth. On the back of the tailwind from the growth and the DX market, Lumada has been expanding successfully, and is now accounting for a greater share of Hitachi's total revenue and profits.
In FY 2024, Lumada is expected to account for one-third of the Hitachi's total revenue and over 40% of the entire profit of Hitachi. Lumada business is also the driver for Hitachi's profit margins or possibility as well. Lumada's customer co creation framework has generated a large number of use cases and solutions. When these use cases and solutions are increasingly reapplied and reused that leads to higher profitability. Growth in digital engineering upstream with high profitability managed services with high recurring rates are also contributing to lifting a profit margins for Hitachi.
As shown on the previous slide, increased the share of Lumada as a percentage of our total business is what is driving Hitachi's profitability overall?
In the previous restructuring phases, the bottom line was unstable due to significant one time effects, such as the gains from asset sales and large losses from a business exit. Going forward, the impact of a onetime gains from large asset sales will decrease. On the other hand, unexpected risks such as pandemics and the geopolitical instability will continue to emerge. And we will strengthen risk management to minimize such on time losses.
On this slide, we listed some of the potential risks success and we intend to minimize them. So that we will be able to move into the stable bottom line growth phase. This shows the capital allocation policies for our sustainable growth. While cash flow from assets sales will increase to ¥1.1 trillion due to the sale of a portion of Hitachi Astemo's shares. Coal free cash flow will decrease to ¥1.2 trillion due to the deconsolidation of Hitachi Astemo. So the total is expected to remain unchanged to ¥2.3 trillion. Among the allocations growth investments will be made with a focus on the style green and innovation and we will be implemented by strictly applying financial decision criteria.
When they are attractive gross investment opportunities, we will flexibly utilize financial leverage using a new set of EBITDA multiple of one to two times as a guideline. And today, we announced that we will increase our dividend to ¥75 per share and they repurchase ¥100 billion of our own shares. And therefore the total amount of shareholder return, we intend to increase it from a ¥0.7 trillion which is 50% over core free just for you know initial plan to ¥0.9 trillion taking into consideration the guideline of 50% of net income.
So, I have explained about the top line growth, high profitability and also bottom line stabilization and the cash generation described so far will lead to EPS and the CSPS growth in order to generate the highest shareholder return level. And as for the top line, we will capture the tailwind of DX and the GX and achieve sales growth of 5% to 9% going forward. For higher profitability, we will achieve 12% or higher adjusted EBITDA margin by expanding the mother business. We will also stabilize the bottom line with an adjusted EBITDA to net income conversion rate of over 60%. Furthermore, by further enhancing cash generation, we will increase the conversion from an income to core free cash flow to over 80%. As a result, we aim to achieve EPS of over 600 pm and the core free cash flow per share of over 500 pm in fiscal 2024.
Next, I will explain Hitachi's progress regarding sustainability management that supports growth.
First of all, I will describe like the status of the capital strengthening of the human capital. In the midterm management plan 2024, we have set three important goals acquiring and developing digital talents, promoting DEAI and improving engagement. We are making steady progress in strengthening our digital human resources, by utilizing GlobalLogic's recruitment and development scheme. DEI is also evolving steadily with talent acquired through global M&A playing an active role. So we are making steady progress here. And as for the improvement of engagement as of fiscal 2022, yes, we have engagement score that was the target set. But we were able to achieve the target set in the medium-term management plan ahead of schedule, and the it is now up to 68%. Going forward, we will aim for higher level and with the One Hitachi in mind.
Next, I will discuss progress on contributing to decarbonized society. Hitachi aims to be carbon neutral by fiscal 2030. We are making progress at the pace far exceeding the target set in the mid-term management plan 2024 and expect to achieve a 64% reduction compared to 50% reduction target for 2024. We aim to contribute to the decarbonization, not only within Hitachi Group, but also the decarbonization of our customers as well through our energy steel pipe, energy conservation and electrification businesses. This is expected to exceed the target set in mid-term management plan 2024 of 100 million tons of CO2 emission reduction contribution per year. And we expect to reduce approximately 120 million tons of CO2 emission. We are also working actively to continue to the secular economy.
On the left hand side of this slide, on the EU, some of the activities within Hitachi Group to promote secular economy, and we are making steady progress towards the goals. And we are also promoting various activities from the perspective of contributing to society as a whole. We established the secular economy collaboration lab with AISD last October and we are promoting room formation and the full show implementation in collaboration with global research institutions. And for example, Hitachi GLS has the vacuum cleaners, for example, and also the compressor from Hitachi Global Air Power, just a few examples of our efforts on this slide, which contribute to solving the social issues, through product and solutions in all of our businesses.
Lastly, I'd like to talk a little bit about the situation regarding the strengthening of governance. The composition of our Board of Directors is rich in diversity, and we are constantly engaged in lively and diverse discussions on management reform. In particular, highly effective measures for monitoring the progress of the midterm management plan deliberation of investment and loan proposals, and CEO succession plan are formulated and promoted, based upon discussions within the Board -- among the Board members. Last year, in recognition of these activities, we received the -- of the Corporate governance of the year 2012 award from the Japan Association of Corporate Directors. And as announced the day before yesterday, we are also revising the executive compensation system linked to the enhancement of enterprise values. We will continue to strive to improve our corporate value by evolving our governance as a global company centered on our Board of Directors.
This is going to be the last page of my presentation. Today, I gave an overview of the progress of the mid-term management plan 2024 under the theme of model change from the cost based of the business portfolio reform to sustainable growth. And we are planning to organize a Hitachi Investor Day 2023 on the 13th of June and I and for Executive Vice President will explain the businesses more in detail.
So green digital connective, so specifically we will talk about them we intend to show how each sector is expanding its business was along Hitachi, using the modest customer co creation framework. In their respective fields under the three transformational trends of green digital and connective. We look forward to actively discussing with you and investors at this forum and we hope you will join us.
This concludes my explanation of the progress of the medium-term management plan 2024. Thank you very much for your kind attention.
[Operator Instructions] We will take questions first from the Japanese channel and then onto the English channel. We have members that present institutional investors as well as analyst. So we would like to take questions from all of you. So let's start taking questions from those of you on the Japanese channel. [Operator Instructions].
I have two questions. Are they over consolidated a business plan. I have a question regarding the revenue plan. So all three main segments, the increase in revenue plan seems to be low 3% or 4%, 1% increase in revenue for the three sectors respectively. In the prior year, it was 11%, 12% quite high. So planned revenue increased seems to be lower than what I expected. So what are the reasons if you could share your thoughts, as well as the background. Overall is demand slackening is that what is expected or Hitachi's room for growth or a room for share increases that are starting to be limited, what are the reasons? So, what are the reasons? Why are you planning a smaller revenue increase for the three main sectors. [indiscernible] talked about 5.75% to 7% growth for MMP. I think it was one of the slides. 5.75% to 7% growth. Compared to that revenue increase the plan is rather low.
Now, in a three-year plan, the concern is that the growth rate will start to taper over the three-year span. But is that a relevant and correct thinking? So, that's my first question. My second question is as follows. About Hitachi Energy, orientate is growing very rapidly. According to the revenue plan down 4%, that is what is our planned and commerce on earlier talks about the gap. I believe. But if you please elaborate on the details as to why revenue decreases planned? And when do you think, revenue will start picking up? But once again a given the order intake is growing? Together with PMI costs 28.7 billion was the number for the new fiscal year. So, why the PMI classify such energy is so high? What are the activities? And do such a large number are required going forward? So with respect to Hitachi Energy, if he could please elaborate on that as well.
Regarding MMP, Kojima will respond. For detailed numbers [indiscernible] supplement. First FY '23, a revenue increase that is planned seems to be slow. That was what was pointed out in the question. In terms of our earnings, given the portfolio composition, I don't think our revenue earning capability has gone down at, because of external environment. I think we are being conservative in budgeting.
Well, the share market is doing low but real economy is still struggling. Forex, if we look at Forex, I think today Yen is a little cheaper ¥134 to the dollar, it's still uncertain. BOJ monetary policy is as considered to change, it's expected to change. So what will happen to the interest rate and global environment economy because of security issues is still unstable. So in the second half on own word though, our assumption is that there will be increased uncertainties. And it's not that the portfolio earnings capabilities down. We are reflecting a largely the macroeconomic environment that we are expecting and thus, these numbers.
With respect to Hitachi Energy, as I mentioned earlier, to be a little more specific, FY 2022 March end orders, so we're around 2.7 trillion, a year ago ¥1.7 trillion. So in just a span of one year, order build up for ¥1 trillion, which is amazing. As Kojima Keiji earlier said, in the energy area, there has been tailwind, so the business is very robust. But actually, orders once received have to be manufactured because of the pandemic. In the last 30 years, there has been employee furloughs and CapEx have to shrink. So compared to order intake growth, the manufacturing capacity development is somewhat delayed. So specifically, as of the end of September 2202, ¥2.7 trillion of orders.
In FY '23, what percent of the orders would be reflected? 50% and that will be reflected in our revenue. A year ago, the rate was 55% to 57% because the order is growing so fast, manufacturing is not catching up, so down 5%. And in FY '25, somewhere around 30%. It will be down to 30%. There is time lag between order intake and manufacturing. And so that is kicking in in a major way.
But for Hitachi Energy, we are planning to increase CapEx. We have been instructed, CapEx to increase. So once that is done, the reflection rate of 51% to profit and loss, the number in FY 2023, that will start to go up. So year-on-year negative growth will be alleviated somewhat. PMI costs. It is very high you pointed out. And suddenly, on Page 13, ¥28.7 billion is being planned. Actually, this was largely IT integration cost.
By the end of FY 2022, IT system migration from the old ABB system to a new system that migration was supposed to be concluded, but there has been delays. So FY '23, it's still continuing. So this migration cost is pretty large. So majority is IT migration costs. And in the process of migration, ABB's all system has to be used. And usage fees have to be paid to ABB, that's because of TSA, transitional service agreement, and fees must be paid. But according to our plan, migration will end in FY 23. So this cost will go down, quite sharply thereafter. So that would be all for me.
If Kojima has additional comments?
Well, thank you very much for the questions. So 5% to 7% growth planned in the new MMP. As I said in my presentation, FY '21, ¥6.7 trillion, that will be the number for the consolidated businesses. In FY 2022, this was a very large ¥7.6 trillion largely because of ForEx impact. So it was growing, quite substantially. So FY '24 MMP, in light of that, because FY '22 and H2 number was large the overall planned numbers are somewhat lower. So FY '23 revenue target may appear very conservative. I agree FY '23, how will the economy evolve, we cannot forecast how it will evolve, we're being quite conservative as to the economic outlook down with respect to Hitachi Energy, if I may add, as commerce and earlier said, from order backlog to revenue, that ratio is around 50%.
And so, if I, '23 revenue is already covered by orders already taken. So in that regard, we are being extremely conservative. But on the other hand, if we are to raise possibility, that's very important. So low margin contracts, we do not want to blindly go after low margin project, we would like to be very selective in choosing projects. Given the current business environment, we are able to choose projects.
So rather than going after revenue blindly, or we would like to make sure to raise possibility. That's what we would like to focus on. But as I said earlier, I think the revenue and optionality will be larger than this number. With respect to PMI, as Kawamura explained. In order to raise productivity, we made a major shift in our IT systems and such new systems are being deployed in different countries, and there are several countries which are struggling. And that's where the delay is, we would like to completely conclude a migration so that there will be no more costs incurred next fiscal year and onward.
Next, Mr. Yasui please unmute and please ask your question.
UBS Securities, my name is Yasui. Can you hear me?
Yes. Please go ahead.
Thank you very much. I have three questions. Mr. Kawamura in the past 14, the shareholder return ratio, and among [indiscernible]. But the value creation is not changed. So the idea behind the shareholder return has changed? That's my first question. And second question on page 10. The growth area, so the North America is expected to grow, it drives growth. But now in the mid-terms, there are some areas that are doing quite well and the other areas that are not performing so well. Could you please give us more details?
Number three is about Astemo. And the whole the Honda has increased and Hitachi portion or the holding will go down to zero in the future. So please give us some more details about the future holding over Astemo?
So first of all, I would like to respond. First of all shareholder return idea behind the shareholder return and maybe I can say that we changed our idea about the shareholder returns. Now this also related to Hitachi Astemo, but so far. We conducted structural reform of the business and the reshuffled the businesses, we sold some businesses. And the huge amount of cash and the info was realized as a result of that. And we were supposed to return those benefits to the shareholders. However, we decided to use it for the reshuffling of the business to acquire new assets, to change Hitachi significantly. And as a result, that will enhance the value that we can create as a Hitachi to be returned to the shareholders. So that is the idea and I believe that we, one, your understanding on this point. But as I mentioned today, we are changing our mode towards the more growth. So now, when we have our cash inflows, first of all, we have to return to the shareholders. So core free cash flow, one half of that 50% or the onetime the interest income increases, because of the onetime gain from the sale of the assets. Then that and they again shall also be distributed to the shareholders. So that is the idea.
In terms of net income of ¥500 billion is our yield, and the 50% or 50% TSR. So, that means, the ¥250 billion. So that's going to be a little less than 2%, ¥250 billion, meaning that the additional ¥100 billion is to be used for the share buyback. So well when we divest the business. And then we have the incoming [indiscernible]. And with that will also be the use for the distribution of the return to shareholders. That was the, that is earlier, we applied. So the 50% of the net income, or we need to consider that as well, from the viewpoint of shareholders. And that is the idea behind the words I have written on the site.
And the second question is about the growth of North American business. There in North America, businesses are doing quite well, because Global Logic, Hitachi Energy and the very, very business, these businesses are doing quite well in North America. And that led to the significant amounts of the oldest and Global Logic is growing significantly. However, at the same time, so the industry related to businesses, that's what we like to accelerate furthermore. Hitachi Global airport [indiscernible], so we have these assets as well, and augmenting those assets. So together with Global Logic, we'd like to generate more synergies in these areas. So the sides to the effort to accelerate these businesses as well.
And the third question is about the holding of Hitachi Astemo. Well, it's going to be a long story, but first of all, it used to be the auto related to business within Hitachi, we used to have our business divisions. So there used to be one business unit within Hitachi, but we knew that it's not going to be larger and the size or scale was important. So the OEM put this company together with another company and created the independent company, and we made it larger, and getting closer to the mega supplier in order to survive the business.
So the image with the community and the affiliated companies although Honda, and this was consolidated because we try to make this larger while separating this business in the future. So the challenge was, well we needed to do the PMI merging four different companies into one which is quite challenging. And the Hitachi needed to put these four companies into one with our responsibility. So that's the way we conducted merger and the integration. And this industry is moving quite rapidly. So the car OEM, we need to capture what they are thinking about the business. And as of the established supplier, we need to create and establish deep relationship with automotive OEM. And in that sense, it is better for Honda to take an initiative for this company. So in order to achieve the IPO in the future, and we also invited to -- and the Honda and Hitachi, we try to maintain the good balance and we allow Honda to have more control over this business.
So the EV market is moving quite rapidly, and in order to win the competition in this highly competitive the EV market, we needed to augment to this company. So the statue is holding, it is not that we are going to reduce our holding ratio on the irrevocably, we would like to make sure together with Jeep and the Hitachi and our partners to keep the things of this on the upstream business, until IPO is possible. Thank you very much.
Thank you. Next, [Hiero]. And please unmute to ask your questions.
This is [Hiero] speaking from Nikkei. Can you hear me?
Yes.
Thank you. Hitachi Astemo is de-consolidated. You have three sector structure. Is this the endgame? Or do you plan to add or subtract anything are you planning to add anymore? And you have a number of global competitors with the structure in place. So how do you go about differentiating yourself against competition?
Now MMP presentation, Page 21, ¥960 billion is the EBITDA planned. There is a major increase. How are you going to realize that? And in order to meet the targets under MMP '24, I'm sure there are a number of risks that you have to overcome. What are the risks, semiconductor or geopolitical risks? If you could please comment on that. I started asking a lot of questions.
Thank you for your questions. Allow me to answer your questions. So three sectors structure or framework, the so called consolidated businesses, so what is lacking? I don't think there is anything lacking in any major ways. So with this framework in place, we would like to utilize assets, build the Lumada business and expand our business globally. As we grow, we may require more digital personnel. So in order to strengthen each of the businesses, investment may be called for. For example, in terms of GlobalLogic, Romania. Well, they have acquired companies through bolt-on acquisitions.
And so such moves, maybe May, but very large scale M&A as acquired large assets. During MMP 2024, we are not thinking of having such very large acquisitions. So how do you differentiate ourselves against competition? That was part of the question. Actually around the globe, Hitachi Energy, a railway business GlobalLogic that somewhere. We now have a number of assets in place for us. Now as we conduct our business activities, so utilizing these assets, with IT/OT and products. We can provide a total support to our customers, there are not a lot of players like us who can do so. The more we draw on our strengths, I think the more we will be able to differentiate ourselves against competition.
For example, customers DX requirements or greening requirements. On a global basis, we are getting such comprehensive inquiries. And so DX had GX and these are arising and so we are an IT/OT product player, providing all of these to meet such customer needs. And that's how we like to differentiate. And you also asked about profitability, FY 2024, the target EBITDA is so ¥962, the hurdle is that pretty high, you mentioned. What becomes basically important is for the mother, to generate profit and to grow solidly.
As you can see, I'm sure, at the bottom, the Lumada portion, we're trying to lift it up by 90 billion or so. So in that regard 0.9, so that's about 900 billion, and 900 billion will come through Lumada's growth and the remainder of 60 billion will come from Hitachi Energy's Green Business railway. And by so doing, we would like to achieve 960 billion. So with the Lumada's achieved meant of 900 billion, I think we will be able to achieve 960 billion in total.
What are the risks that we're seeing that was another question that you asked? Well, there are so many new risks arising all the time. So what is the biggest risk for us?
FY '23 without a doubt, a risk of recession? That's what we're looking at. Other issues with two banks as well as interest rates here in Japan as well somewhere access strategies, I'm sure potentially will be discussed with BOJ. And such changes will it for the better will it for the worst. Both will happen, but no doubt, there will be changes continuing to happen. So how can we minimize and mitigate risks for us. That's the most crucial point, it's a recession risk in FY '23.
That's going to be prolonged, recession is going to be prolonged, it will be the greatest risk continuous into FY '24, it will affect our MMP 24. So through various measures, we would like to mitigate such recession risks. That would be all. Thank you.
Next, Mr. [indiscernible] please unmute and ask your questions, please.
This is related to previous question about the risks and recession concern is what you mentioned. Specificity what kind of the background or are you referring to when you talk about the recession risks? And that risk factor, well which business line is more susceptible to such risk of recession? And the another question from a different point of view will be related to business. And then you talked about the acquisition of the business of [Attalus]. I believe it was on the target here used to be 2022, but it has been delayed. So, could you please explain about that? And in the midterm management plan, by 2024 you are trying to achieve the record high the revenue for the railway business and does this business, do they have any impact on that target?
Thank you very much. This is the Kawamura. And I'd like to respond to the first question about the risks and then tell us and the amateur management firm related questions will be answered by [indiscernible].
So, first of all risk factors. As always mentioned at the beginning, first of all the recession and also the interest rate is that the latest factor and the balance sheet was explained in my presentation, interest bearing debt of this company exceeds ¥2 trillion. So, if that interest rate goes up by 1%, it will be the impact over ¥20 billion. So interest rate is what we are focusing upon, the dollar rate is coming up and we have been able to absorb that, but well the yen, the interest rate accounts for 70% of our borrowing. So, the other is what we are looking at closely.
And second point I mentioned about this in my presentation, but we are procuring and purchasing various materials and the prices are rising sharply. For example, semiconductor, where they did and also electric are still actually on the copper wire harness and the automotive seat are still seeing. So, in the past few years. Well the price today is three to four times higher than what it used to be in the polar the price is also coming up sharply. So we are discussing among ourselves as to how to cope with this. But yeah, back in 2022, our procurement costs of 40% to 50% of those on the price increase, cost increase. There has been passed through to the customers our pricing, well the through negotiation, we hope to race on this ratio of pass-through up to 90% approximately or ideally 100%. Of course that we have to negotiate and talk with customers.
So to what extent we can shift the cost increase to the selling price increase, that is what we need to look at. So the interest rate and the inflationary response to an extent we can do this. Well the other price pass-through is the ultimate measure but we still are what we are looking at closely and particularly among the business lines. So the asset bases are large in those areas or the impact will be larger, or the interest rate increase will impact some of those businesses, because the work will increase in return expect that will be higher. So that's going to be a risk.
So in that sense, such that the energy and very business will be they have on the asset of more than ¥1 trillion. So the impact for these business lines will be particularly big. So that's my response to the first part of your question. Next, I will ask the President, Mr. Kojima to talk about the reason behind the delay of the [indiscernible] acquisition and the impact on the plan?
Thank you very much on the initial color for your questions. There are two of the authorities, they regulate us. We are currently discussing with them. This is related to under competitive the conservation and the negotiation with the two regulators. Originally EU and UK. It used to be EU that was the center of the issue. EU, there was not much overlapping in the business. We didn't -- we were not concerned about that. However, once the situation became clear, EU and also UK. There are two phases, Phase 1 and Phase 2 in the anti-competitive, the order anti-monopoly, the exercise. The Phase 1 it's over quite quickly. However, Phase 2 requires a lot of work like a submission of documentation and others and it's going to take time. And it will started in the UK. So it is taking time. And I believe that the situation will wind down in EU. But the issue is UK and the Phase 2 response in the UK that will last until September this year. So that is the reason for the slow progress.
Particularly towards fiscal '24, including fiscal '24, what is the impact of that delay? So if we can complete this by September, so September is the target that we are looking at in the -- making the plan for '23, '24. So if you can do this by September, it will be okay. And this is the carve out from Thales. So when we talked about Hitachi Energy, I talked about the IT system and others. How about it has done the risk of its own? We need to take various measures. And yes, if it is totally standalone business, and the start PMI is going to be easier. So no, it's been delayed. We would like to enhance the carve out process.
And that is what Hitachi Energy and the Thales are talking about. And so that to facilitate the PMI process, so there was a delay, but that means we have time to prepare for that. So we like to make sure that, this doesn't have much impact on the 2024. And the Thales portion, Mr. Kato, could you please talk a little bit about Thales?
Yes. First of all, on the first question related to interest rate. Well, the Page 20 of the financial results, the 2023, the interest and the numbers are shown here, '23 to '22, ¥9 billion that is the increase that we expect. And the domestic borrowing is based upon fixed rate and the foreign currency is also based upon fixed rate. So even if our market rate increases, it doesn't mean that our borrowing will be subjected to certain increase in the interest rate.
Thank you very much for your response.
Thank you. Next, [Ayadavan] Please unmute and ask your questions, please.
Yes. [indiscernible] JP Morgan speaking. I have three questions as well. Question #1, on Page 17 of the earnings presentation about the Lumada business. There were a lot of numbers that are very helpful. But if you could please provide commentary as to how the numbers line up over time. The top left year-on-year 43% increase. But in the first half, there was a successful growth. So if you look at the fourth quarter only, what was the growth? According to my quick calculation, it must be around 20%. So is that correct? Initiatives this fiscal year plus 16, so what is the significance of 16%? Is that because of the impact of the business cycle, perhaps the hurdle is becoming higher, it's no longer a business so that can grow another 20%, 30%. So, what is the nuance behind this number 16%?
My second question was, is that to Telus that was discussed earlier. This fiscal year, a railways adjusted EBITDA. Last year was 5.5%, but this year, it's to be down to 3.7%. So, what's the reason behind that, I would like to know?
Telus according to the explanation on a consolidated basis. I think the Telus number is based on consolidation consideration. So revenue and adjusted EBITDA for Telus this year, what would be the numbers? And [indiscernible] talked about PMI. Is it the cost of depreciation, amortization, is it migration costs is that some costs are reflected. So if you could give the numbers around that as well. So that's the second question.
And I'm sorry for being lengthy, but my question number three says, fullest MNP adjusted EBITDA margin is 12% that remains unchanged. Last year, it was 9.5%. This year on a consolidated basis 10.2% from that level, next year 12%.
Jump up for next fiscal years. So apparently almost a disruptive growth. Where does that confidence come from? And now if we look at the businesses in which business areas for the next fiscal year, do you see a substantial growth? I'm sure, you will be providing details on the IR day, but if you could just share your thoughts on that today as well.
So Lumada's fourth quarter number. Can we pull the number? Well, I would like to talk about FY 2022 and FY '23, [indiscernible] speaking. Thank you for the question. Well, about the fiscal year 2022, 42% growth very high growth was enjoyed by Lumada. Lumada itself grew, but there were two tailwinds or two factors behind this, but one was ForEx. So because of the TPN, it had positive impact and GlobalLogic was another factor. And FY '21, July GlobalLogic was acquired.
So there was positive impact on GlobalLogic in the one quarter for FY 2022. So that was another tailwind. So FY '23, 16%, it may appear like a major reduction, but those factors no longer contribute, but we believe that Lumada will still continue to grow quite robustly and tell us what will be the numbers for the second half?
Well, in terms of the rail business, as you rightly pointed out, possibility will be down by 0.2 percentage points from '22 to '23. That's because of Tallis integration costs. The Tallis business that's carved out will be brought to Hitachi. And as was mentioned earlier, because of the timing delay, Tallis is a carve out work is making headway, which is a positive for us. But then there's IT integration costs as well. So PMI cost includes IT migration, IT integration costs, and there will be a lump sum cost in FY '23 but if we exclude that, from FY 2022 to '23, adjusted EBITDA ratio will go up by 0.5 and 0.6 percentage points. So excluding Tallis, I think EBITDA ratio will be somewhere around 7%.
Just to supplement some [indiscernible], just like Hitachi Energy, a railway has a lot of order backlogs, Hitachi Energy, well, actually over 4 trillion a double that of Hitachi Energy how will that be reflected in profit and loss. In Hitachi energy, the lead time is three years. Railway away is a longer-term business. So it will start to be reflected in profit or loss starting from FY '26 and onward. Half of their backlog will take more than three years. And so the lead time is very long, and that is affecting a railway business. So just add to the comments?
So, I mean I tend to go [indiscernible] about MMP disruptive a growth plan. So FY '23, in terms of profit, there is a some drag, there are some transient factors that are negative. So if we exclude them, as somewhere around 11%, it can be achieved. So considering that number, I don't think the hurdle is not going to be too high. If we can improve the ratio by 1 percentage points every year, we will be able to achieve the targets. So FY '23 we're being quite conservative as was mentioned. FY '25, we need to see business recovery back to normal, and so if that assumption pans out, then I think the target says under MMP 24 is achievable. [indiscernible] anything to add?
No, I don't think so. Thank you. Thank you for the question.
Just one clarification. So what's in this fiscal year's plan? So [indiscernible] factor pushing down, adjusted EBITDA number. So Hitachi Energy, PMI costs, Tallis is going to be consolidated. And Tallis, that PMI related costs, those are the main cost items pushing down adjusted EBITDA correct and DSS structural reform, structural reform expense. That will hit adjusted EBITDA by FY '24. We will reap the benefits of structural reform in DSS. Thank you.
Thank you very much. next with below. Please unmute and ask a question.
Thank you very much. My name is -- from Jefferies Securities. Can you hear me?
Yes.
You talked about the Hitachi High-Tech, which is measurement and analysis. And the 30% reduction in the order in the first quarter. And also the margin is down for the incoming businesses. So is that because of the adjustment of the business? So when do you expect the bottoming out of business? Probably, it's going to pick up in the second half of the year. If you have any idea, please share your idea with me. Appreciate it.
Thank you very much for your question. So I am Kojima. I would like to respond to that Hitachi Hi-Tech main business. There are two pillars of the businesses. One is semiconductor, the evaluation and measurement equipment and the second is, together with Roche of Switzerland, we are working together with -- which is the analytical and the equipment. And the other later, well, they will remain solid in '23, '24. And, Phil, it will be affected by the business and the market and the economy is a semiconductor related business.
Semiconductor manufacturing and the inspection equipment, looking at that particular market and customer demand, 2023, the business will slow down because the players will refrain from making the active CapEx investment. However, the companies are indicating their strengths in the investment activities in '24. So starting from the second half of '23, are we going to see the at bottoming out? Personally, in my view, '23 from the companies we refrain from making investment. But starting from fiscal '24, they will increase their investment. That is how we look at the market.
If I may, I'd like to ask you another question. Adjusted EBITDA and the companywide elimination and fiscal '22 guidance, the ¥92 billion that was the amount, I believe, ¥92, but actually it was ¥46 billion. And in the new guidance, well, it is down ¥1 billion for the elimination. And IT platform investment is not on the included here or the risk buffers are not included. So could you please explain a little more about this item?
Thank you very much. I'd like to explain. So, fiscal 2023 Slide 15 shows that minus the ¥16 billion that is written here, which is the ¥10 billion higher than last year. It is because strategic investment. We are reducing the strategic investment. That is the reason for the company items and elimination this year. 2023, as we mentioned, it is very difficult to see what's going to happen in the economy this year. So there are about ¥20 billion. We introduced the buffer over ¥20 billion. That is the idea behind these numbers.
And the ¥20 billion buffer outside of the operation, are there any buffers, which are within the scope of the business?
Actually this is about the ¥20 billion which is a part of the business operation. How about the non-operating aspect, as each sector they are looking at risk of their own sector areas. So they own the company wide basis, so we have not introduced anything specific or special.
[Operator Instructions] I do not see any hand on the English channel. So we would like to come back to the Japanese channel. [indiscernible] please unmute and ask your questions.
I have a question regarding performance for FY 2022. For three years in a row, you have achieved record highs, so for railway and Astemo. Why are those businesses growing? What are the reasons? What kind of customers what kind of businesses were successful? What strategies panned out and earlier you talked about interest rates and ForEx that these could turn into risks for you going forward?
Now that you have a new structure in place, and BOJ is under a new management under Governor Kuroda low interest rates continued for the past decade. But with the new governor in place, monetary policy is expected to change. What do you expect to have BOJ in terms of its monetary policy? What are your expectations?
Regarding Astemo and rail business [indiscernible] and what is our hope and expectation for BOJ. I would like to send to [indiscernible] for an answer for that.
Regarding our railway business, FY 2022. They were very strong orders, large deposits were acquired. Canada, Ontario, Toronto financial sector, the train system, ¥1 trillion order was received in Europe. In Italy and other places we were able to acquire orders. So rather than control and a signaling system, it was the roll stock orders that came in which were large. And so role stock and signaling system control. What's the profit level? Without [indiscernible] business we won't be able to have enough for signaling and control system business.
We need to take roles some core business Jason accent in FY 2022. We had lunch orders for [indiscernible] stock. Regarding Astemo last fiscal year that this was very bad in FY '21. So it appears that there was recovery in FY 2022. The major reason behind that is with that pandemic under control, those semi conductor shortage show continues. For the GM and Nissan it is OEM manufacturers. There are increasing car supplies and because of that parts are being sold increasingly, so there's recovery in car OEM manufacturers Honda is positively reflected in our summers recovery. So I would like to turn to Kojima for comments on BOJ.
Thank you for your question. Well, we're going to like to request is for BOJ to have good communication with the market and that BOJ is transparent and communicating with the market so that we know what the BOJ message is. Inclusive of exit, I'm sure, there are lots of discussions to be heard. And so we want to BOJ to have good communication with the market so that we can be pretty well prepared. We don't want any surprises coming from BOJ and we'd appreciate that having not so surprises, found the BOJ. Thank you.
Next, Mr. [indiscernible] please unmute and start your question.
Thank you very much. This is, [indiscernible]. I have three questions. First of all, starting from April this year, well DIU put the global the logic of the sub segment and the header which is in charge of a supervisory to that. So the Global Logic used to be within the data segment and it was not easy to see separately the Global Logic, but I hope it's going to be more disclosure about the business and the performance related to Global Logic. I hope is going to be changed. And I would like to welcome your comments on this point.
And the second question the page 15 of the meter management and the material and the bottom line stabilization and the cash regeneration, adjusted EBITDA and the free cash flow. So, these are not directly related to the accounting results but there is a ongoing shuffling out of business. So this is how you put these in this way, but they ultimately is going to be included into the regular financial indicators like of the appropriate and other stocks you please explain about the background of this presentation.
Thank you very much. First of all Global Logic and the disclosure, Mr. Kawamura will respond to that. And the midterm management plan to Present Kojima will respond to that. First of all Global Logic. Well, they are attending in Silicon Valley, and the synergy how to generate synergy between Hitachi and Global Logic. That's what they are other team is working on. So the we have no intention to change the way we disclose material. Or for example, page 17 of the waste material, please look at this page. Here, bottom right, you see a bar, which shows us three different segments and the Lumada on the ratio. For example, this whole system service and the green energy and mobility in the middle and the right hand side the connective industries bring energy and mobility possible. It's smaller, such that the energy and waste and the Global Logic. Pollution is what we are looking at how to generate the synergy. That's what Mr. [indiscernible] is working on.
When this person becomes larger than that to the [indiscernible] the question as to how we should handle the disclosures. So the Mr. Taniguchi segment how to grow it is the challenge and the longest that we'd like to consider the further disclosure. So the Mr. Kojima page 15 of the midterm management from the A plan, on the increase.
Thank you very much for your questions. So the stabilization of the bottom-line and the cash leads to what I talked about, and the core cash flow and the bottom-line with these two. And our intention is to make this clear so that you understand the shareholder and to the value. So the adjusted EBITDA is the indicator we are using. And also net income and the core free cash flow. We are trying to introduce the indicator to connect all these three in order to deepen your understanding. So that's our idea. So the ratio between net income and the core cash flow or the adjusted EBITDA. So among these factors, we would like to connect them. And when do you have something happen to EBITDA on how the bottom line will move, and then that will be also related to the cash flow. So the reserve demand that we created this presentation. So during the reshuffling of the business, well, it is ongoing, but it is not that we keep this, because the business is changing. We would like to create the business in organic manner. So the EBITDA, the core free cash flow and the net income, we would like our target to still make this presentation easy to understand.
Understood. Thank you very much. And also one last point. Astemo, you also mentioned about Astemo and how much -- how big was it? And you are going to sell your holding in September and valuation will change them. So it's going to be a valuation loss or the valuation gain. I think it's going to be fixed in September. So what is your outlook?
Ye. Kato will respond to that.
As for impairment, basically, we do not disclose the impairment. I appreciate your understanding. And this is impairment, but this is non cash transaction. So it doesn't have any tangible impact on the business, that's our understanding.
Understood. So the after there will be no disclosure even after the sale?
So what do you mean by sale?
I'm talking about the sale of the holding in the Astemo. Is there be any changes of the valuation, valuation loss or variation in the profit?
Yes. Kawamura will respond to that.
So when the three companies are they integrated into one, well, there was a corporate value calculated back then. But the Astemo business was not sufficient so far. So the 40%, 40% and 20% when and the change of the holding took place and that resulted in change of the valuation. And based upon that change of valuation, the 40%, 40%, 20% the valuation was calculated based upon that. So naturally, well, the valuation changed. But the impairment, as -- mentioned, this is not the cash item. So when variation is calculated, when this is turned into present value, this is not included in the calculation. But the major reason is over the past two years, performance of the Astemo pushed down the evaluation of the Astemo. And the one additional point from a Kato, again, this was not in the first quarter. This was the incurred in the second quarter.
Understood. Thank you very much. This answered my question.
Thank you very much.
Thank you. The time to close is fast approaching. So those of you raising your hand [indiscernible] in that order, we will be taking questions. And then close surveys, questions and answers. I look forward to your cooperation. First, [indiscernible] please unmute and start your questions.
Two questions. Question number one, FY 2022 order number is given for the three segments, FY '23 given the inquiries that you are receiving, what will be the numbers directions? Hitachi Energy, it's a sub segment, but if you could also share your plan and thoughts when Hitachi Energy for FY '23 as well.
My second question has to do with core free cash flow. On March FY '23, the number was 270 billion, but it was overachieved at 400 billion. Why? Of course, the cash flow plan is changed 1.2 trillion from 300 billion this term to close to 500 billion next term. What are the measures to improve to such an extent? Core features close to 500 billion, how are you going to bring the number to that level?
My last question that may overlap with earlier questions, so Hitachi's Lumada IT/OT product with the three combined you are differentiating yourself to grow I understand that. On the other hand, in what forms and shapes are you differentiating? They can be understood better by the market, your valuation perhaps will be closer to that of Accenture. So with the Hitachi strengths, if you have examples of winning against your competition, I would like to know?
So to respond, do we have the FY '23 order intake number cutters and we'll answer that with respect to orders. Let me briefly answer. FY '23, we have not been able to collect all the orders yet, but at the base things are very well digital service assistance page 22. I think the business will continue to be robust. FY 2022, a sole ForEx impact for FY '23, ForEx impact will decline, but basically the same green energy and mobility 53%.
Hitachi Energy and rail had a lot of orders, so close to 60%. And for this year, it could be affected by large pauses, especially for rail business, I don't think we'll be having as high level as last year and collective industries. FY '22, it was flat year-on-year. And for FY '23, the expectation is that it will increase. So core cash flow common and we'll answer and your third question Lumada [indiscernible] will answer it.
So what you pointed out, we are very much aware of the FY '23. FY '24 with a two year program, we're going to resolve the cash issue more specifically. We will have to work on the revenue side and the cost side. On the revenue side, relatively speaking about also businesses where return is not enough. So we need to restructure them quite stringently, so that return can be improved. So we need to raise the merging of such businesses. And so we need to work on improving the returns on some of those businesses on the cost side, as has been disclosed.
Some of will be deconsolidated, it's going to have a loss impact. We had a revenue of 10 trillion or over but with reorganization, it's going to be down to 8 trillion, 20% reduction. So inclusive of corporate functions, we had a structured fit for 10 trillion, there's going to be 20% reduction in revenue, it means that we have to reduce costs by 20%. So, on the cost side, we have to make efforts to generate cash. So on both the revenue and the cost side we need to work hard to meet the target although the target is pretty high.
So on Lumada customer sample answers, just as some comments on core free cash flow, when it comes to large, we get a payment based on milestones. We are having contracts and taking actions to these of the customers so that we can get to a revenue and profit quite solidly. I think that kind of thinking has started to take root. And this year, CapEx is increasing about, we will like that to perform so that we can over achieve the target. FY '24 as I said earlier, adjusted EBITDA, how can we increase conversion rates so that we can turn adjusted EBITDA into free cash flow that is very crucial?
Well, since internally, we have not been too cautious of these metrics, trying to translate profit into cash flow, that part was rather weak. And we have strengthened that claim conservatively, and with such efforts, we will receive 1.2 trillion and IT/OT products.
Are we able to differentiate with the three combined and are we winning?
Of course, we will like to share the such success examples. And we will like to do that on the day. But some customers do not like their names to be mentioned as they say. Some of them say that their names should not be mentioned. We would like to find customers whose names can be shared and hopefully we can find some customers who are happy to share their stories themselves. And with that, we can develop a better understanding on your part. Thank you.
Thank you very much know we'd like to welcome one last question today and [indiscernible] please.
SMBC [indiscernible], my name is [indiscernible], thank you very much for your presentation. And I would like to ask two questions. First of all, this is portfolio on the, you transform the business on the portfolio, but you already configured that. And you will shift your focus upon a sustainable growth of the business. Now the Lumada profit margin profitability, how would you like to push up the profitability of Lumada? On the page 17 of the financial results I have numbers, but the concept to the revenue growth, profit growth is about 20%, so because the GP ratio is not so high for the amount of business or the SG&A is high. And how about the cost structure of Lumada?
What is the current status of Lumada business in this regard? Please explain. And also, would you like to strengthen the Lumada business? The company wide the elimination and the strategic cost for two consecutive years, those amounts were not used fully. So they -- you would like to use this much amount, but you are not able to use them or because of their market condition, you are not only able to use them. So it is difficult to see from outside what is happening. So the Lumada profitability enhancement is important. So I would like you to explain on that point. So that's question number one.
And question number two is about the new year guidance for the fiscal '23 in the Connected Industries, I'd like to ask you, so the adjusted profit. There are several points, Hitachi High-Tech. Well, the assembly conductor manufacturing equipment environment or the market is very tough. And the revenue and the profit plan is solid because of the order backlog we already captured. So the difficult market condition, despite of the market difficulty, you have the certainty that you will be able to achieve these in growth. And industrial, digital, in the first quarter, it was doing quite well. Is this because of the contribution by Lumada? So what is the current status? And also industrial products, the mass products produced products and the mass produced product, it seems that the order the acquisition is quite good. So could you please explain about the background of this business? Please explain.
Thank you very much for the questions. So, the first part, the Lumada part. I will ask President Kojima to talk about the Lumada business.
Yes, thank you very much for your question. And Lumada profitability from a mid to long-term perspective, I'd like to explain. Lumada profit margin, profitability is determined well, the first the customer, they have a new case, inviting new customer and the use case can be used for the use case, and the development cost is incurred for that. However, second round, third round, well similar transactions and deals go to the customers.
Initial investment cost or the development cost will be lighter, lower. So how to scale the business, that is the key to success. So the number of use cases, and number of solutions is quite important in that sense. We need to make the good use of that. To enhance the scalability that will lead to higher profitability. So that's the good method to promote. And secondly, particularly, digital engineering, system integration. For these works and areas, people --- this is a labor intensive area. It requires people. So number of headcount is almost equivalent to revenues. So mid to long-term perspective, how to raise the profitability of that part of the business? That is another important area. And the key here is, how to use AI effectively.
System integration low code, no code is possible and to reduce the use of order creation of software and reduce the headcount to enhance the profitability, profit margin, that's what we'd like to pursue. And on top of that, we will skip ahead of that. This show engineering something similar to consultation. That sounds what we'd like to introduce the more AI. So this is the area. It is not that we need more people to scale the business, but we need to grow out of that and that is the key to answer revenue without increasing the headcount. So together with R&D, that's exactly where we are focusing upon.
Then the 2023 outlook, your questions about the outlook 2023 will be answered by [indiscernible]. And the Hitachi High-Tech, as you see on the slide. 2023 revenue is equivalent to that level of '22. As for the breakdown, the analysis, analyzer 7% growth is expected semiconductor nanotechnology logic customers, foundry customers and the sales of the manufacturing equipment will increase at the rate of 4% and other materials and the procurement related to business will be lower.
In fiscal '23, it is not that we received the old order, so lately. But with the customers, so, we are talking a lot with the customers and we have some idea as to how much we can sell to those customers. So, I believe that we can achieve that much sales. So based upon what we discussed so far, and you talked about the industrial digital business. As was mentioned, Lumada's the IT/OT is done by this area. This solution robotics SI are very solid and the solidly increased and growth. Compared to '22, but in fiscal '22, there were big deals and the project, but there was no repetition of the same project and also exchange rate ForEx will also be relative. So that is the reason why we expect the flat growth.
Industrial digital, the non-mass produced and the mass produced the business. And the non-mass produce the products that UTS and the compressors and the IT, these are the electrification, the related businesses will be the leader in this segment, overseas and domestically. Thank you very much.
With this, we'd like to conclude the presentation on the consolidated financial results for the year ended March 31, 2023 and the progress of the mid-term management on 2024. And lastly, I'd like to make an announcement about the Hitachi Investor Day 2023, scheduled on the 13th of June and we will give you further details later. So thank you very much for your attendance. It's been a long meeting, but thank you for your attendance today.