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Let's look at the reasons behind the projected year-on-year change in operating income for the fiscal year ending March 2013. While the projected figure for operating income remains at 67.0 billion yen, given the ongoing appreciation of the yen against euro and other currencies, we have made changes to the factors that will affect our bottom line in the following three areas.
First, we revised the projected gain from reduced material costs upward from our initial forecast, with an additional gain of 5.2 billion yen. This 5.2 billion yen increase will come from FHI due to lower material costs and better market conditions given the current trend in material prices.
Another revision reflects a 3.2 billion yen decrease due to foreign exchange fluctuations. We revised the projected yen rate against the euro from 105 yen to 99 yen in light of the ongoing appreciation of the yen. This six yen difference is expected to generate a loss of 2.6 billion yen. The projected yen rate against the Canadian dollar has been raised one yen to bring it up to 79 yen from the previous estimate of 80 yen and will result in the loss of 0.5 billion yen. We also expect a loss of 0.1 billion yen due to foreign exchange adjustments for transactions between FHI and its overseas subsidiaries. The projected yen rate against the U.S. dollar remains unchanged from the initial forecast.
Finally, we expect an additional 2.0 billion yen loss from higher SG&A expenses as we posted an allowance for recalls in Japan and other markets in the first quarter.
While we made some revisions to the full year forecast as outlined above, we continue to aim for the operating income target of 67.0 billion yen that was initially projected.