Q: What are the factors behind the increase of revenue and adjusted operating profit in the first quarter?
A: Revenue increased ¥50.2 billion year-on-year. The factors behind this increase include (i) an increase of ¥24.6 billion generated from solution business, which comprises H-E Parts group companies and Bradken group companies that became consolidated subsidiaries last fiscal year, (ii) a decrease of ¥7.6 billion due to the conversion of Hitachi Sumitomo Heavy Industries Construction Crane Co., Ltd. (HSC) to an affiliated company, accounted for by the equity method, (iii) an increase of ¥3.4 billion as positive impact of the foreign exchange fluctuation, and (iv) an increase of ¥29.8 billion generated from construction machinery business.
Adjusted operating income increased by ¥14.3 billion year-on-year to ¥16.8 million. Factors behind the increase include an increase of ¥19.1 billion due to sales volume, model mix and others, consisting of (i) an increase of ¥17.4 billion in sales volume (the net effect of an increase of ¥8.8 billion by solution business, a decrease of ¥2.5 billion due to HSC deconsolidation, and an increase of ¥11.1 billion due to increase in sales volume of construction machinery business), and (ii) an increase of ¥1.7 billion due to changes of model mix and others. Other factors for its increase are (i) an increase of ¥1 billion resulting from an increase of selling price in Europe and the United States, (ii) a decrease of ¥100 million due to foreign exchange fluctuation, (iii) a decrease of ¥200 million due to increased material costs, and (iv) a decrease of ¥5.4 billion due to increased overhead expenses. Incidentally, the increase in overhead expenses is derived from (i) an increase of ¥1.7 billion due to deconsolidation of HSC, (ii) a decrease of ¥6.3 billion due to consolidation of the two group companies operating solution businesses, and (iii) a decrease of ¥700 million due to increased R & D expenses.