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Moving on, I would like to briefly discuss the factors for the 10 billion yen upward revision, from 25 billion yen to 35 billion yen, to our operating income plan for the first half of the current term. A key factor for the increase is 15 billion yen in additional profits from an improved sales volume and mixture and others. This can be broken down into three areas. First, a 3 billion yen improvement of mixture in Japan, second, an 11 billion yen improvement of mixture due to growth in overseas unit sales of the Legacy and Outback primarily in the United States, and third, a 1 billion yen improvement from other inventory adjustments, etc.�
On the other hand, as a factor negatively affecting operating income, we forecast steel prices will raise at FHI, which will decrease the effect of materials cost reduction by 3 billion yen.
In addition, an increase of SG&A expenses and others will lead to decrease of 1.5 billion yen profits, which can be broken down into the following two areas.
First, 0.5 billion yen decrease due to reduced SG&A. Of this, an increase in advertising expenses at FHI will lead to negative 1 billion yen, while reduced incentives at SOA will contribute 1.5 billion yen gain, as our planned sales incentive for the first half will be reduced from the originally planned 1,300 dollars per unit to 1,150 dollars per unit.
Second, a 2 billion yen decrease due to an increase in warranty claim�expenses. We will make an allowance for Legacy recall expenses.
Exchange losses will also negatively affect operating income by 0.5 billion yen. This is attributed to an expected 0.1 billion yen increase from the US dollar, which we assume an exchange rate will be 87 yen after August 2010, then, average 90 yen for the first half, which will be the same level with our original assumption. �0.9 billion yen decrease from the Euro, which we assume an exchange rate will be110 yen after August 2010, then average will be 116 yen during the first half, or a 4-yen decline from our initial outlook. For the Canadian dollar, we assume an exchange rate of 83 yen after August 2010, but during the first half it will raise to 87 yen, which will be 2 yen above our initial target of 85 yen, resulting in a 0.3 billion yen gain. |
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