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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Excuse me, this is 03:30. So we'd like to start Mitsubishi Heavy Industries Quarter 1 to 3 Fiscal Year 2021 Financial Results Meeting. I will be your moderator for today, the Head of the IR and HR department. My name is Inoue. Thank you very much.
First, let me introduce today's speaker. You have Director, Executive Vice President and CFO, Mr. Kozawa. Mr. Kozawa, thank you very much.
So first, Mr. Kozawa, the CFO, will speak about the Q1 to 3 fiscal year 2021 financial results. After that, we'll go into a Q&A session. This meeting will end by 04:30 p.m. Thank you very much in advance for your cooperation.
For today's material, we will be using the Q1 to 3, FY 2021 financial results, this 1 presentation material. Please refer to this through our IR information on our website.
So Mr. Kozawa, CFO, will go into the explanation of the third quarter. The floor is yours.
Good afternoon everybody. Thank you very much. In terms of the materials, we have already released the material, so I will skip reading the numbers and focus on the highlights and the follow-up information.
First, this is the overall review. This is on Page 4, and then please refer to Page 5 for the numbers and charts.
Order intake increased more than 10% by JPY 256.3 billion to JPY 2,492.3 billion from the same period last year. Following the first quarter and the same quarter, the Plants & Infrastructure Systems and the Logistics, Thermal & Drive Systems has continued to increase strongly. Specifically, order intake of Plants & Infrastructure System driven by metals machinery was JPY 639.1 billion for Q3, already exceeding the level of last fiscal year, which was JPY 575.2 billion.
Revenue and profit at all levels went up year-over-year, showing an improvement from last year. Profits from business activities was achieved in all segments.
Going to Page 6 and 7, I will explain about the balance sheet. Total assets went up from the end of last fiscal year due to the increase of working capital, but this is normal fund at movements and is trending as anticipated. Interest-bearing debt has increased from the previous year-end, but as it was not shown here, it was JPY 1,121.8 billion as of the end of the previous third quarter, so it has gone down by JPY 50 billion year-over-year. Other indicators are within the range of assumptions we have set at the beginning of this fiscal year.
Going to Page 8. Cash flow. Operating cash flow has improved by JPY 287.7 billion year-over-year. One reason is that we saw an increase of profit as well as reduction of contract liabilities and reduced consumption of advances received.
To explain more in detail, initially, we were anticipating a certain level of reduction of contract liabilities and advances received. But due to the expanding order intake of metals machinery, et cetera, we were able to book advances received, and we were able to reduce the consumption of advances received. Due to this reason, Operating cash flow is trending better than our initial outlook.
For investing cash flow, we have steadily proceeded our sales of real estate and cost held stocks. As such, we are proceeding ahead of schedule while investing in growth areas. Based on the improvement of working capital and acceleration of sales of stocks, we have raised our guidance of full year free cash flow from plus 0 to plus JPY 100 billion.
Going to Page 9. This is a by segment order intake and order backlog.
Page 12 is a slide that so this is a chart at a glance. So please refer to Page 12, if necessary. As I said in the beginning, this year's order intake has substantially exceeded last year's level in Plants & Infrastructure Systems and Logistics, Thermal & Drive Systems. The main drivers of the improvement were the metals machinery and machinery systems in Plant & Infrastructure Logistics Systems and HVAC and engines in the Logistics, Thermal & Drive Systems.
The order intake level of these 3 subsegments exceeded that of fiscal year 2019, which was before COVID-19. On the other hand, although auto-related business such as turbochargers and car air conditioning has gone up year-over-year, but the growth in itself is slowing down.
Page 10 is the revenue by segment. In the Aircraft, Defense & Space segment, revenue has gone down, shipment for Aero structures has declined as well as decline in Defense Aircraft & Missile Systems as last year's revenue in these areas were high. As for other segments, revenue recovered from the decline we saw last year due to COVID.
Page 11 is the business profit by segment. As I stated in the outline, all segments achieved profitability. The reason that for profit has declined in Energy Systems is that in the same period of the previous year, we booked transfer gains of JPY 83.1 billion from sales of holding of the JV MHI versus Off-Shore Wind. So if we exclude this gain from the previous year, business profit would have been negative JPY 4.7 billion. So this year would actually have been an increase in profit.
However, there were the initial stage issues that happened at IGCC, which we explained in our Q2 results briefing, which led to some additional costs in the third quarter. As a result third quarter cumulative results stood at JPY 13.8 billion. In the Plants & Infrastructure Systems, the factor behind the gross profit is increased revenue from the metals machinery and the organizational transformation, such as sales of the machine tooling business.
Logistics, Thermal & Drive Systems segment, although I will go into detail later, demand is robust in this area as recovery from COVID is proceeding. As a result, although there is an impact coming from the shortage of semiconductors and skyrocketing material costs and logistics costs and profits increased.
So this is the -- in terms of the by segment situation, it's on the Slide 20 onwards. Please refer to them later.
Slide 13, outlines changes in business profit year-on-year. On the far left, business profit for Q3 of fiscal 2020 was JPY 23.7 billion. Excluding SpaceJet cost, business profit was JPY 126.9 billion. Shown on the far right is actual business profit for Q1 to Q3 fiscal 2021 of JPY 80.8 billion. The reasons for the gap are described in between.
Net asset variance means the difference in gain on sale of land and others between last and fiscal -- last fiscal year and this fiscal year. And last fiscal year, we had made a gain of -- so we don't have the numbers here, but plus JPY 43.8 billion and there's a change of JPY 80.8 billion. That's a difference.
First, net asset variance means the difference in gain on sale of land and others between last fiscal year and this fiscal year. Last fiscal year, we had made a gain of approximately JPY 30 billion on sale of land of former Iwatsuka plant, in Nagoya in Q2. For this fiscal year -- as was disclosed in October, we divested a number of properties, including Muara Karang and the gap is JPY 8 billion, and this is posted in Q3. And last year, there was more, and therefore, it's a decline of JPY 8 billion. This quarter, -- and the pink bar on the right showing negative JPY 24 billion shows the downside from rising material and transportation costs and production cuts due to shortage of semiconductors. This has impacted mainly the Logistics, Thermal & Drive Systems segment.
The blue on the right shows negative JPY 24 billion. This is an increase in profits in line with changes in revenue of Logistics, Thermal & Drive Systems and Commercial Aviation. Please understand this as mainly the recovery from COVID pandemic. The impact of COVID on Logistics, Thermal & Drive Systems and Commercial Aviation are shown on the next slide.
Year-on-year, Logistics, Thermal & Drive Systems and Aero Engines revenue have increased. Let commercial aviation Aero Structures Tier 1 business revenue has decreased. As a result, impact on the profit was positive for the first 2 businesses and was negative for the [ latter ] business. And the total was JPY 24 billion. On the right is JPY 23 billion showing the impact of changes in revenue and profit improvements in Plants & Infrastructure Systems and Energy Systems. Regarding the effect of foreign exchange rates, the yen has tended to depreciate against both the U.S. dollar and the euro year-on-year.
Fixed cost reductions of JPY 13 billion includes fixed cost reduction in Aero Structures, integration of Mitsubishi Power and divestment of machine tool business and acquisition of naval ships business.
Please turn to Page 14. This slide is a concise explanation of Logistics, Thermal & Drive Systems and Commercial Aviation related businesses, which were severely impacted by COVID-19 directly. Logistics, Thermal & Drive Systems and Aero Engine are on a recovery trend roughly in line with our initial expectations. However, even within Logistics, Thermal & Drive Systems, there are differences in the pace of recovery in automotive-related products and others.
And in Commercial Aviation Aero Structures business, mainly consisting of Aero Structure supply to Boeing, revenue decreased year-on-year during which the business had already experienced intensive negative effects from COVID-19. Production cuts by aircraft OEMs are continuing. For example, the delivery of Boeing 787, our main model, has decreased significantly to 23 units from 70 units in Q3 last fiscal year. We expect the full year total to be far below our initial forecast and also year-on-year.
Slide 15 is the summary of Q1 to Q3 fiscal 2021 results. In one word, after the start of Q2, there were some negatives in some businesses and risks, but some are improving. Overall, we are making progress to achieve the full year forecast.
Slide 16 to 18 shows the fiscal 2021 forecast. We are maintaining the forecast for order intake, revenue and profits. For our free cash flow, we made an upward revision of JPY 100 billion based on the progress until now and the forecast going forward. This concludes the Q3 fiscal 2021 financial results presentation. Thank you very much.
[Operator Instructions]
First, from SMBC Nikko Securities. Ouchi-San please.
This is Ouchi, speaking. Can you hear me.
Yes. We can. Please go ahead.
So my first question is the third quarter results -- so against your forecast of the business plan, I think it's basically in line with your forecast. But in terms of the IGCC issues they continued into the third quarter. So what is made into actual amount? How much was the impact in terms of the future outlook, what we should consider? And if you look at Page 13, material costs, logistics costs, this rocketing costs you talked about that in the second quarter. In the third quarter, the impact seems to be widening. So against the full year forecast, how much downward pressure would that have? So mainly these are the 2 negative impacts I would like to ask. In terms of the more upside I think in terms of the aircraft business seems to be progressing well. So where this offset, the downside and then be able to reach JPY 160 billion. And when is the timeline, I would like to ask you about these things.
So then, first of all, about IGCC, let me start from IGCC. Yes, in the second quarter, like I said, that it was a considerable amount. For this quarter -- not as much as the second quarter, but very close to that amount. In terms of the maybe through digital sale, IC impact in the third quarter. unfortunately, there is additional costs that we have to consider.
In terms of the future outlook. It's not the case that we are accounting this for bit by bit. But basically, all of the costs that we can account for, we have reflected to our results. So in the fourth quarter, we think basically things will not worsen, including our expectations.
And another question was about the material cost and logistics cost. Well, at the second quarter financial results meeting, with the full year outlook is JPY 25 billion. And I think basically was about JPY 11 billion back at that time. If you look at the most recent outlook, the full year will be a negative impact of JPY 30 billion downward pressure coming from the factors, and that has been reflected in our outlook.
In terms of the upside, maybe I will be answering in the roundabout way. But if you look at the -- each of the segments and if you look at the outlook and what I feel that each of the segments are facing right now. First, in terms of energy. So JPY 100 billion, I think, within the range, I think we are trending at a more higher range. In terms of the progress, maybe in the third quarter may be seeing at a low level. And from my point of view, to be frank. And thought that the third quarter would be better at least 3 months ago, I would expect more to come out of Energy Systems. So compared to 3 months ago, basically, it is trending below our expectations. But in the fourth quarter, there are some projects that we can book sales in the fourth quarter, and we have some improvements that we are making. This is a number that I think we can achieve. But compared to other segments, maybe the hurdle will be higher with the Energy Systems segment.
And going to the Plants & Infrastructure Systems. For here, if you look at the average year progress in the fourth quarter, we are planning to book a certain amount of sales in the fourth quarter. So the fourth quarter basically, we can anticipate some profit being booked. So I think the Plants & Infrastructure Systems is progressing steadily. And in terms of the third quarter and fourth quarter, as shown, as written here, the overseas consolidation of the sites of overseas and then including some costs related to these organizational translation is included. So in the fourth quarter, we're not anticipating further costs. So I think for the Plants & Infrastructure Systems, I think they will be able to reach our target.
In terms of the Logistics & Thermal & Drive Systems. So the first quarter, second quarter, we were struggling. But going into the third quarter, as I said before, the material cost and logistics cost has gone up, but even so, we have been able to reach this level. So specifically going into fourth quarter, so there will be some price increases that will contribute positively to us. So for this segment, we think we can achieve our targets for this segment as well.
And the Aircraft, Defense & Space segment. So -- at the third quarter, we have already -- in terms of profit exceeded the full year profit level in the third quarter already. So for this segment, -- so we basically are taking conservative stance right now. What we are concerned about is the Aero Structure business. So in terms of the Boeing 787 delivery, it is suspended right now. So going into March, whether this will come back again, I think that will be the first concern that we have to look at.
And in terms of fixed cost reduction, we are taking initiatives. But that said, we're not saying it's a limit, but I think we have been reducing costs as much as we can and maybe it will be more and more difficult to show that having a positive impact. So I think we reflect some risk in our outlook. So I hope, frankly, I think -- I hope that it will be better than expectations, but that's roughly our outlook.
Next, JPMorgan, Sano-San.
The first. Energy business, it's weaker in Q3 and on IGCC, maybe I missed here. You mentioned 3 digits, I think. I think it's less than 3 digits based on my understanding, excluding that, are there any downward factors other than that. Could you please elaborate?
The biggest is that part. And if I have to say, the pace of posting of revenue -- I was hoping that the pace would accelerate, but because of the progress of the construction, there were some postponements until Q4. So there are some delays. So numerically, that's the downward reason. So reason -- I hope that answered your question.
Yes. One more question. In the Energy segment, gas turbine, large projects, I think you have received 9 and full year 15, roughly. How is the progress, how is the order environment? Are there any changes in the environment or any comments, please?
As of now, the annual forecast is 15 units. We believe it's achievable on a normal pace. But including the financial closing and the final contract whether it can be -- make it on time, by March or not, there are some subtle projects that may make it by March or not. So there might be just small differences that unofficial contracts, we believe we will be able to achieve this number. So there is no change in our forecast.
And one last question. This is about free cash flow forecast. You have made an upward revision. In Q4, asset management is incorporated, could you explain background to this JPY 200 billion, if possible?
In Q4 we are expecting some real estate divestiture, but it's not such a big amount. Well, it's not small, but it's not big either. So it was very big to Q3. And free cash flow improvement is due to the advances received. And free cash flow has increased as a result, and that's one point.
And another is because cross shareholdings, we have been able to divest them smoothly. We had a lot to start with. So we have taken various measures to reduce them. Compared to before, this fiscal year, we were able to sell a lot. And I don't want to share any specific numbers, but just for your understanding, just for your information, just limited to this meeting only. Amount-wise, JPY 100 billion or so, cross shares have been sold this fiscal year. So in the beginning, we were not expecting to be able to achieve this much, but -- because we have been taking such moves, we have been able to push up free cash flow.
From Mizuho Securities, Ito-San, please.
This is Ito from Mizuho Securities. I have two questions. First is about the gas turbine order intake trend. From a midterm perspective, I would like to know your view. Simply, your peers, so there's a lot of order activities having hydrogen consortium. Are there any those types of orders? And you have talked about 15 units for this year. For next year, is 15 units is a kind of a target that you have. That's my first question.
So in terms of the -- oh, excuse me, hydrogen coal firing. So in terms of the deals that the business negotiations that we are doing, so it's not that we're going to immediately do the coal firing. But in the couple of years, we'll be able to respond to the hydrogen coal firing. So in terms of the business negotiations, we have more and more of those types of negotiations. Specifically, the Americas, most of the cases, business negotiations is focusing on the hydrogen coal firing.
However, in terms of the hydrogen coal-firing board, in terms of the special -- in terms of the hydrogen [ feed ] type of firing, basically, you don't have the hydrogen in the first place. So in the couple of years coal-firing using -- conducting hydrogen coal firing is the type of the target that we have.
So this heavy-duty or the business use, the large gas turbines, 30% coal firing is already we are entering some prototype development. So I think this is one of the differentiations that we can offer.
And I'm talking about the 15 unit order intake. Well, depending on the year, some large lots will come as orders. There will be some ups and downs, but 15 units, I think, basically is a level of target that we are looking at, and we are going forward with our order taking activities based on that type of target.
Another point is about the price increase. I would like to know your take on that. And I think at the beginning of the Q&A session, in terms of the Logistics, Thermal & Drive Systems, you said that the price increase is being slightly reflected in the fourth quarter, you commented as such. So what about -- each region? What product -- what type of price increase strategy are you taking? And what possibility that have in next year's outlook? Can you talk more about that?
Unfortunately, I, unfortunately, do not know the differences by market. But in terms of the products -- in terms of the Logistics, Thermal & Drive System segment, is where the material cost has been impacted most. In terms of the price increase impact, we are hoping that it will show up mostly here. And in terms of the material cost increase, of course, it's not limited to the segment, for instance, Energy Systems for this or the Plants & Infrastructure Systems. So this will be impacted as well for material cost increases.
And of course, if you're going to conduct business amortizations, we're going to reflect the price increase. And even with the contracts that we already have, we may put escalation causes in the clauses so that we can flex the increase of labor cost or the material cost.
And basically, we have been able to pursue these type of clauses. So we're not saying that these were the impact of price increases. So what I have referred to is mainly in the Logistics, Thermal & Drive Systems segment.
And as to add up, so the initiatives to increase the price, we have been doing that from before. But we have not been able to reflect that 2 [ auto system ] prices and to be able to fully receive that impact, there is a time lag. And I think in the fourth quarter, we'll start to see the impact. And of course, there are some of that of the impact coming from the third quarter, but we think that in the fourth quarter, we'll be able to even see more of this coming from our price increase activities.
Next Nomura Securities, Maekawa-San, please. I thought you have a question, but you are not asking anymore. Okay. So does anybody else have any questions? [Operator Instructions]
This is Maekawa from Nomura Securities. I hope you can hear me?
Yes. We can hear you.
I have 2 major questions. First, I would like to ask about Aircraft, Defense & Space. So the cost is not clear, that compared to last fiscal year, the profit has improved very much Q-on-Q. The profit has increased by around JPY 9 billion. Could you explain the background to this. So especially defense seems good. And also, are there any impacts coming from commercial aviation, could you explain? So this is my first question.
For SpaceJet, and you asked about Q3. As of Q3, compared to Q2, there's an increase in profit by JPY 9 billion. In Q3, there seems to be an improvement. And could you explain the background to this.
As for SpaceJet, we do not disclose specific numbers, but for this fiscal year, total of JPY 5 billion negative was the level we had expected. And that's the number we have. So please understand because we do not disclose the details and the specific numbers. And compared to Q2, Q3 is better is that, but there is no major reasons. In terms of revenue, sales size compared to Q1 and Q2, Q3, so looking quarter-by-quarter, every few months, the sales is bigger in Q3. So there's an additional gross profit because of the increase in sales. And last fiscal year, compared to that, it's not that there is a significant difference in defense. If I have to say then, CRJ that we acquired, that's relatively strong. It's not a very big number in absolute terms. So sorry for unclear explanation.
And one more question. From a different perspective, the properties improvement and what are the factors that are doing well.
So compared to what did you say? I wasn't able to hear you.
Compared to the initial plan, so you have already achieved the initial planned numbers in Q3. So what was effective, why were you able to achieve the profit in Q3 already?
In that sense, from that perspective, CRJ compared to the initial forecast, performed better. And also, the Aero Structure business, the number of units have declined, and we are reducing fixed costs. And we are able to progress within our plan, within the range of our plants. So we were able to avoid the risk that we had assumed. So decline in number of units was bigger than we had originally expected. So it was challenging. But with our internal efforts, including reallocation of resources, we were able to reduce the impact.
I see. In Q3, it's not that there was any specific major reasons for the contribution to profit. Is that right?
Well, if I have to say, this year or this fiscal year, there were no launch vehicle launches, but in Q3, there was a launch vehicle launch. And this was positive for us.
Okay. And -- so the second question, I would like to organize my thoughts about the next fiscal year. In energy, steam power, you have received order for biomass and order backlog, backlog is decreasing and you have a JPY 500 billion sales plan. And what is the magnitude of decrease in profit. So would it be around 10%? Or would it be more decrease, if the orders are not coming in? Could you explain about next fiscal year?
So I think you're focusing on scheme. As you pointed out, for this fiscal year, compared to the sales, this fiscal year, next year, fiscal year's revenue will decrease. That's what we are assuming as well. But looking at the proportion, new plants construction will decrease and after sales service will recover. And all in all, probably the revenue size will be a decrease of a few tens of billions of yen. That's what we are assuming now. The decline will be on the new plant installation and increase will be coming from after sales service.
Looking at profit and loss, the impact to the profit itself is not that big rather more than that IGCC and negative factors will be gone and that will push up the profit. And the impact from that will be bigger. That's what we're assuming.
And one more question, again, about the next fiscal year, you have gain on sales of JPY 20 billion or so this fiscal year. And for next fiscal year, how much asset management profit will you be able to generate, will there be a decrease as backlash. This is my question.
Fiscal 2020 or this fiscal year 2021 compared to them, fiscal 2022, at least will be the gain on the sale of properties will be less. That's what we expect because last fiscal year, this fiscal year is very high. And in terms of cash, we are selling shares. And we are front-loading the divestiture of the shares we can do this year. We are aggressive this year. So year-on-year, next fiscal year, will be a bit smaller, I think.
So altogether, I don't know if it will be JPY 20 billion or so. So the decrease would be more than JPY 10 billion, yes. So as for sales of stocks, so in terms of selling cross shares, there's no impact on P&L because we have IFRS. So it doesn't impact profit. So in terms of P&L, the profit and loss coming from the divestiture of land will be the impact. And comparing this fiscal year and next fiscal year, well, I would say the impact would be JPY 10 billion to JPY 20 billion decrease. But I'm not sure any -- there might be some good offers, and we might decide to sell. So I mean, we don't know. It's something like that happens. So based on our assumption, the impact would be the number that I just mentioned now.
Next, Mitsubishi UFJ Morgan Stanley Securities. Ishizuka-San, please.
This is Takeshi Ishizuka speaking from Mitsubishi. So going to the provision of the IGCC, let me talk about that. I think Second quarter, I think it was the issue that came out when you were doing some kind of experimental operations. So in terms of this provision you're making this time, what would this relate to?
So we have already delivered this system. So there are 2 plants. And we have already delivered these 2 plants. Another in the operation, there has been some instability of the operation and taking countermeasures. And there has been some components that we had to change due to the instability. So that's one thing that we have conducted. To be frank, we have -- there's a guarantee in terms of the operation rate. So there is a risk that we'll not be able to achieve this operation rate. So that is included in the provisions.
So is this the end of this type of issues? Or is it going to escalate or more is going to come. Well, to be Frank, I want to believe that this is the end of these type of issues. So if you complete the second quarter and the third quarter, is it the same plant that you're talking about?
Well, we only have 2. And well, basically, it's the same category that we are referring to. But the amount -- so JPY 15 billion and the second quarter -- in the third quarter, it is going down to about JPY 10 billion. Well, it's just that the same issue has reduced, but not another issue has come up. And this kind of issues pop-up in various locations. So I want to think that this is the end. But this is a kind of an unprecedented type of projects that we are engaged in. So for us, we say this is absolutely okay. I think we'll have to take more time to confirm about the operation of this plant.
So in terms of the gas turbine order intake, so currently, going into fourth quarter is basically a kind of an official contract. And then basically, you have to decide about the financing part of the deal.
So that's about 6, right? You're talking about 6 units?
Yes.
So in terms of next fiscal year, in terms of the official numbers of orders that you're looking at, I guess, how many would that be?
So it's not included in orders, but basically, it's close to closing the deal. That will be double-digits. So that will be for next fiscal year. Excluding the 6 units that I talked about.
So in terms of the reason -- well, previously, you talked about Russia, Asia, -- are there some regional areas that you can talk about which regions that you are looking at in terms of orders?
Yes. In terms of the next fiscal year negotiations. Well, it's very difficult for us to refer to what's going to happen in the future. Well, in the third quarter, what we have 5 order intakes. One is in Japan. 4, I think we have a press release. Russia is combined with the compressor.
So in terms of the Aircraft & Defense space. So on the quarter-on-quarter profit increase, so in terms of the launch vehicles included and defense-related revenue is increasing and defense space volume has gone up and then the gross profit has gone up with that. So that has been a contributor. Is that the correct understanding?
So I think in terms of quarter-on-quarter improvement, yes, I think, it was the correct understanding. Again, the defense-related revenue is increasing. So going into the fourth quarter, so if you do the calculation in terms of the profit, it should be the same level as the third quarter in terms of profit. So the fourth quarter revenue tends to be at a higher level, I think. And so in the fourth quarter, what is the revenue outlook, yes, the year-end tends -- we tend to have more revenue booked in the fourth quarter because it's the year-end. And basically, I think that will be the same trend for this fiscal year. So -- as an expectation, to be frank, I hope that we'll be able to get more of revenues than we are seeing right now.
So the 787. So in terms of the delivery compared in -- fourth quarter is going to go down or is it going to be flat.
Well, we do not disclose these numbers. So it's just for your reference. To -- just to give you some facts. So in January, as we -- we had no 787 deliveries, 0. In February, we have no plan to deliver 787s. So for January, February, 0. March from a customer, there's some requests are coming. So there's some couple of models that we're going to deliver. So second quarter for March more than 4 being delivered. I think it's very difficult to anticipate that happening, whether -- if you're asking figures, going to increase the decrease, I think as there's a high probability then we're going to see a decrease.
Daiwa Securities, Tai-San, please.
This is Tai. I wanted to ask what Q3, profit of JPY 12 billion in Aircraft, Defense & Space, I don't have full understanding of that. Commercial Aviation sales to Q3 are about the same. So there are no changes there, then there must be significant improvement for Defense Ministry. And I don't think you'll be able to achieve this number until -- unless 10% profit improvement is seen. Is that the right understanding? And -- or I think you are pretty -- have high visibility about Boeing orders. So Tier 1 Aero Structures, maybe you're selling to other companies or are there such effects? I was wondering, how is it? Is the profits coming from Defense Ministry or -- well, to be concise.
The profit margin, third quarter -- well, because many of the construction, many of the projects are based on the progress and there are some fixed contracts as well. So depending on the volume, there is difference. So the shorter the period we look at, there is more variance in profitability. And having said that, in Q3, compared to Q1 and Q2, defense profit debt increase, as you pointed out. It's a considerable amount of profit in Q3. But annualized, would this be the same annualized? But it's a very story if you look at the full year.
Let me give you one example. We have accounting based on progress and correlation forecast, looking at the cost, we do incorporate risks. And this is based on the accounting rules, and it's very technical, but -- is there additional production, do we incorporate that or not makes a difference. So final revenue timing or very close to that timing, total revenue or total cost may change. So if that happens, if you look at just 3 month snapshot, the profit margin may not be accurate.
So for us, it's very good that it may be -- it will be positive, but I wouldn't deny a situation where it would work negatively. So please keep that in mind to look at our numbers when you look at our numbers. So I'm not sure, if I was able to answer your question. But...
Okay. My second question is about raw material costs. This fiscal year, JPY 30 billion or so for this fiscal year, you mentioned, I think. On Slide 13, up until Q3, the progress is shown. But this is raw materials cost transportation and shortage of semiconductors all mixed. And if possible the impact of raw materials at Q3, how much was that? And also shortage of goods and transportation, if you can divide them into 3, could you share the breakdown of this JPY 24 billion.
So this is a rough answer that I will be giving you at a high level. Up until Q3, raw materials was negative JPY 8 billion. So this is the breakdown of JPY 24 billion. Logistics, negative JPY 7 billion, semiconductor minus JPY 9 billion. So this is the actual and JPY 30 billion for the full year, materials minus JPY 11 billion. Logistics, minus JPY 11 billion. Semiconductor shortage, minus JPY 8 billion. So compared to up to 3Q, so the final number is subtle, but we are expecting some recovery.
And last of all. My question is something totally different. In Q2, other than IGCC, you had some organizational transformation costs in metals. And Q3, is there a lot of costs related to this? In Infrastructure segment, are there any onetime costs? What was the magnitude of that? So you're talking about Plants & Infrastructure Systems. So Metals Machinery, there was restructuring. With the consolidation, it's not of the number of projects have increased, but the timing of posting on the cost for Q3 was double digit or single digit billion yen. And -- so is this the JPY 2 billion to JPY 3 billion.
Yes. And in Q4 -- we are not planning to post anything. If that's the case, if you proceed as is IGCC, is there are no additions in Q4 -- so it will be 24% to 25% full year and Plants Infrastructure is around JPY 10 billion altogether. It'd be JPY 35 billion one-off impact that there is benefit of JPY 20 billion of divestiture. And if everything is reversed next year, you can expect to see a profit increase by around JPY 10 billion.
And are there any changes you're feeling that may generate some upside. So like your own efforts to improve profitability. So looking at some special factors, you can envision JPY 170 billion or so, but do you feel any changes where you will be able to say JPY 200 billion or more than that?
So I'm not sure if I should say the past 3 months. In October, we have consolidated integrated Mitsubishi Power and that impact will be generated. The fixed cost perspective, so many of the corporate functions have been consolidated. So there are some savings. And as for business, energy transition what we are about to do, so we will be shifting resources from steam power. We are proceeding with that. And next fiscal year, this will be accelerated more. So I think efficiency can improve in various ways.
In Mitsubishi Power, I would like to supplement, up until now, Yokohama building had a lot of people working there. But we have narrowed down, and we have shifted the resources to sites to operate in an integrated way and operate efficiently.
And we expect to see savings coming from that. And at the same time, in October, near time systems, so this is for [ only 3 OSK Lines ] part of business. So I limited the site as well. And as far as I saw and based on the information I'm getting, I think the integration is proceeding well and people from the former business is doing well, and they are making efforts as well. And we believe that we can generate impact. And would that be JPY 30 billion or JPY 50 billion? Probably not that much with this, but there are impacts coming in the past few months. And going into the details, Commercial Aviation Engine, Aero engine, we have lost a plant in Nagasaki and they have started full-fledged operation. And that should generate impact as well. Also, in organic world, I hope we will be able to do something and report to you about it.
I think we have come to the end of our allotted time. We would like to end today's meeting. Thank you very much for participating despite your busy schedule. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]