Company Announcements

Mitsubishi Electric Announces Consolidated Financial Results
for the First 9 Months and Third Quarter of Fiscal 2021

TOKYO, February 2, 2021 - Mitsubishi Electric Corporation (TOKYO: 6503) announced today its consolidated financial results for the first 9 months and third quarter, ended December 31, 2020, of the current fiscal year ending March 31, 2021 (fiscal 2021).

1. Consolidated First 9 Months Results (April 1, 2020 - December 31, 2020)

The economy in the first 9 months of fiscal 2021, from April through December 2020, continued to see recovery in China mainly owing to an increase in capital expenditures for fixed assets, particularly in public investment, as an effect of political measures. Japan, the U.S. and Europe experienced a significant economic slowdown due to the serious impact of the novel coronavirus diseases (COVID-19) in the first quarter, but recently saw recovery in the corporate sector in general, while the paces of recovery in the household sector varied depending on the situation of the expansion of COVID-19.

Revenue

Revenue in the first 9 months decreased by 309.5 billion yen from the same period of the previous fiscal year to 2,940.6 billion yen as revenue decreased in all segments due to the serious impact of COVID-19 primarily in the first half. Industrial Automation Systems segment saw a decrease in the factory automation systems business due to stagnation in automotive-related demand worldwide and machinery- and building-related demand in Japan, despite an increase in demand relating to 5G and semiconductor. The automotive equipment business also decreased due to decreased demand for new cars in all regions except for China. Home Appliances segment saw a decrease in air conditioners due to limited economic activities outside Japan and restrained capital expenditures worldwide.

Operating Profit

Operating profit decreased by 44.5 billion yen from the same period of the previous fiscal year to 137.7 billion yen due mainly to decreases in Industrial Automation Systems, Home Appliances and Information and Communication Systems segments despite increases in Energy and Electric Systems and Electronic Devices segments. Operating profit ratio decreased by 0.9% from the same period of the previous fiscal year to 4.7% due primarily to decreased revenue.

The cost ratio increased by 0.5% from the same period of the previous fiscal year due primarily to lowered operation caused by decreased revenue of Industrial Automation Systems segment. Selling, general and administrative expenses decreased by 67.0 billion yen from the same period of the previous fiscal year due mainly to reduced cost, but selling, general and administrative expenses to revenue ratio increased by 0.2%. Other profit (loss) decreased by 10.1 billion yen from the same period of the previous fiscal year due primarily to decreased gain on sales of land. Other profit (loss) to revenue ratio deteriorated by 0.2% from the same period of the previous fiscal year.

Profit before income taxes

Profit before income taxes decreased by 40.4 billion yen from the same period of the previous fiscal year to 158.3 billion yen due mainly to a decrease in operating profit despite an improvement in non-operating expenses owing to improved gain/loss on foreign exchange. Profit before income taxes to revenue ratio was 5.4%.

Net profit attributable to Mitsubishi Electric Corporation stockholders

Net profit attributable to Mitsubishi Electric Corporation stockholders decreased by 51.9 billion yen from the same period of the previous fiscal year to 107.7 billion yen due primarily to decreased profit before income taxes and the impact of reduced income taxes as a result of the reorganization of its affiliated company outside Japan in the same period of the previous fiscal year. Net profit attributable to Mitsubishi Electric Corporation stockholders to revenue ratio was 3.7%.

Consolidated Financial Results by Business Segment (First 9 Months, Fiscal 2021)

Energy and Electric Systems

The market of the social infrastructure systems business saw a decrease in demand relating to power generation worldwide and the reconsideration of the capital expenditure plans by railway companies in Japan due to the impact of COVID-19, while investment in public utilities for preventing and reducing disaster risks and demand relating to the electricity systems reform remained buoyant in Japan. In this environment, the business saw a decrease in orders from the same period of the previous fiscal year due primarily to decreases in the transportation systems and the power systems businesses in Japan, while revenue remained substantially unchanged from the same period of the previous fiscal year due mainly to progress in orders already received for projects in the power systems business in Japan.

The market of the building systems business saw decreased demand in new installations and renewals of elevators and escalators worldwide due to delay in construction and the reconsideration of the capital expenditure plans that happened in stagnation caused by the impact of COVID-19. In this environment, the business saw decreases in both orders and revenue from the same period of the previous fiscal year due primarily to decreases in Japan and Asia.

As a result, revenue for this segment decreased by 5% from the same period of the previous fiscal year to 867.9 billion yen.

Operating profit increased by 11.2 billion yen from the same period of the previous fiscal year to 58.6 billion yen due mainly to a shift in project portfolios and cost improvement.

Industrial Automation Systems

The market of the factory automation systems business saw continuing stagnation in automotive-related demand worldwide and machinery- and building-related demand in Japan, while demand relating to 5G and semiconductor increased outside Japan and there was demand relating to increased mask production in China. In this environment, the business saw an increase in orders but a decrease in revenue from the same period of the previous fiscal year.

The market of the automotive equipment business saw a decrease in demand for new cars in all regions except for China due to the impact of COVID-19. In this environment, the business saw decreases in both orders and revenue from the same period of the previous fiscal year due mainly to a decrease in electrical components despite an increase in electric vehicle-related equipment such as motors and inverters.

As a result, revenue for this segment decreased by 12% from the same period of the previous fiscal year to 892.1 billion yen due primarily to a decrease in the automotive equipment business.

Operating profit decreased by 30.6 billion yen from the same period of the previous fiscal year to 28.3 billion yen due mainly to decreased revenue.

Information and Communication Systems

The market of the information systems and service business saw delays and cancellations of system development projects, particularly in the manufacturing industry, due to the impact of COVID-19. In this environment, the business saw decreases in both orders and revenue from the same period of the previous fiscal year due mainly to a decrease in the system integrations business.

              The electronic systems business saw an increase in orders from the same period of the previous fiscal year due primarily to an increase in large-scale projects for the space systems business, while revenue decreased from the same period of the previous fiscal year due mainly to a decrease in large-scale projects for the defense systems business.

              As a result, revenue for this segment decreased by 19% from the same period of the previous fiscal year to 243.7 billion yen.

              Operating profit decreased by 5.1 billion yen from the same period of the previous fiscal year to 6.0 billion yen due mainly to decreased revenue.

Electronic Devices

The market of the electronic devices business saw a slowdown in demand for power modules used in industrial, railcar and consumer applications, while demand for high frequency and optical devices relating to next-generation data centers remained buoyant. In this environment, the business saw a decrease in orders from the same period of the previous fiscal year due primarily to decreases in power and TFT-LCD modules, despite an increase in high frequency and optical devices, particularly in optical communication devices. Revenue also decreased by 4% from the same period of the previous fiscal year to 148.9 billion yen.

Operating profit increased by 2.0 billion yen from the same period of the previous fiscal year to 7.5 billion yen due mainly to a shift in product mix and cost improvement.

Home Appliances

The market of the home appliances business saw a decrease in demand for air conditioners globally due primarily to the impact of COVID-19 causing lockdowns and considerable limitation of economic activities outside Japan, particularly in the first half, and restrained capital expenditure worldwide. Meanwhile, there was demand for consumer electronics due to increased time at home. In this environment, the business saw a decrease in revenue by 9% from the same period of the previous fiscal year to 754.9 billion yen due primarily to a decrease in air conditioners.

              Operating profit decreased by 12.2 billion yen from the same period of the previous fiscal year to 57.4 billion yen due mainly to decreased revenue.

Others

Revenue decreased by 12% from the same period of the previous fiscal year to 424.8 billion yen due primarily to decreases in procurements and services at affiliated companies.

Operating profit decreased by 10.3 billion yen from the same period of the previous fiscal year to 5.8 billion yen due mainly to decreased revenue.

2. Consolidated Third-quarter Results (October 1, 2020 - December 31, 2020)

Revenue

Revenue in the third quarter decreased by 29.0 billion yen from the same period of the previous fiscal year to 1,038.5 billion yen due primarily to decreases in Information and Communication Systems, Energy and Electric Systems and Electronic Devices segments despite increases in Industrial Automation Systems and Home Appliances segments. Energy and Electric Systems segment saw a decrease in the building systems business due primarily to delay in construction worldwide caused by the continuing impact of COVID-19. Industrial Automation Systems segment saw an increase in the factory automation systems business due primarily to increased demand relating to 5G and semiconductor outside Japan. Home Appliances segment saw an increase in residential air conditioners in Europe, North America and Japan.

Operating Profit

Operating profit increased by 8.3 billion yen from the same period of the previous fiscal year to 76.3 billion yen due mainly to increases in Industrial Automation Systems, Home Appliances and Energy and Electric Systems segments despite decreases in Information and Communication Systems and Electronic Devices segments. Operating profit ratio increased by 1.0% from the same period of the previous fiscal year to 7.4% due primarily to a shift in project portfolios and reduced cost.

The cost ratio decreased by 1.0% from the same period of the previous fiscal year as due mainly to a shift in project portfolios of Energy and Electric Systems segment and higher operation caused by increased revenue and reduced cost of Home Appliances segment. Selling, general and administrative expenses decreased by 16.6 billion yen from the same period of the previous fiscal year due primarily to reduced cost, and selling, general and administrative expenses to revenue ratio improved by 0.9%. Other profit (loss) decreased by 9.9 billion yen from the same period of the previous fiscal year due mainly to decreased gain on sales of land, and other profit (loss) to revenue ratio deteriorated by 0.9%.

Profit before income taxes

Profit before income taxes increased by 7.9 billion yen from the same period of the previous fiscal year to 82.6 billion yen due mainly to an increase in operating profit. Profit before income taxes to revenue ratio was 8.0%.

Net profit attributable to Mitsubishi Electric Corporation stockholders

Net profit attributable to Mitsubishi Electric Corporation stockholders decreased by 8.9 billion yen from the same period of the previous fiscal year to 59.5 billion yen due primarily to the impact of reduced income taxes as a result of the reorganization of its affiliated company outside Japan in the same period of the previous fiscal year, despite an increase in profit before income taxes. Net profit attributable to Mitsubishi Electric Corporation stockholders to revenue ratio was 5.7%.

Consolidated Financial Results by Business Segment (Third Quarter, Fiscal 2021)

Energy and Electric Systems

The market of the social infrastructure systems business saw a decrease in demand relating to power generation worldwide and the reconsideration of the capital expenditure plans by railway companies in Japan due to the impact of COVID-19, while investment in public utilities for preventing and reducing disaster risks and demand relating to the electricity systems reform remained buoyant in Japan. In this environment, the business saw decreases in both orders and revenue from the same period of the previous fiscal year due primarily to decreases in the transportation systems business worldwide and the power systems business outside Japan.

The market of the building systems business saw decreased demand in new installations and renewals of elevators and escalators worldwide due to delay in construction and the reconsideration of the capital expenditure plans that happened in stagnation caused by the impact of COVID-19. In this environment, the business saw decreases in both orders and revenue from the same period of the previous fiscal year due primarily to a decrease in Asia.

As a result, revenue for this segment decreased by 6% from the same period of the previous fiscal year to 303.2 billion yen.

Operating profit increased by 5.4 billion yen from the same period of the previous fiscal year to 32.4 billion yen due mainly to a shift in project portfolios and cost improvement.

Industrial Automation Systems

The market of the factory automation systems business saw an increase in demand relating to 5G and semiconductor outside Japan, while automotive-related demand worldwide and building-related demand in Japan remained stagnant due to the impact of COVID-19. In this environment, the business saw increases in both orders and revenue from the same period of the previous fiscal year.

The market of the automotive equipment business saw an increase in demand for new cars in China and Japan from the same period of the previous fiscal year, although the number decreased in Europe and the U.S. due to the impact of COVID-19. In this environment, both orders and revenue for the business remained substantially unchanged from the same period of the previous fiscal year.

As a result, revenue for this segment increased by 4% from the same period of the previous fiscal year to 343.5 billion yen.

Operating profit increased by 8.8 billion yen from the same period of the previous fiscal year to 26.5 billion yen due primarily to increased revenue and cost improvement.

Information and Communication Systems

The market of the information systems and service business saw delays and cancellations of system development projects, particularly in the manufacturing industry, due to the impact of COVID-19. In this environment, the business saw decreases in both orders and revenue from the same period of the previous fiscal year due mainly to a decrease in the system integrations business.

              The electronic systems business saw an increase in orders from the same period of the previous fiscal year due primarily to an increase in large-scale projects for the defense systems business, while revenue decreased from the same period of the previous fiscal year due mainly to a decrease in large-scale projects for the defense systems business.

              As a result, revenue for this segment decreased by 24% from the same period of the previous fiscal year to 78.2 billion yen.

              Operating profit decreased by 5.2 billion yen from the same period of the previous fiscal year to a 1.1 billion yen due mainly to decreased revenue.

Electronic Devices

The market of the electronic devices business saw a recovery in demand for power modules used primarily in automotive applications, but demand for power modules used in industrial applications slowed down. Meanwhile, demand for high frequency and optical devices relating to next-generation data centers remained buoyant. In this environment, the business saw an increase in orders from the same period of the previous fiscal year due primarily to an increase in power modules used in automotive applications, while revenue decreased by 6% from the same period of the previous fiscal year to 48.3 billion yen due mainly to decreases in power modules used in industrial applications and TFT-LCD modules.

Operating profit decreased by 2.7 billion yen from the same period of the previous fiscal year to 1.7 billion yen due primarily to decreased revenue.

Home Appliances

The market of the home appliances business saw an increase in residential air conditioners due to increased time at home in Europe, North America and Japan, while demand for industrial air conditioners decreased globally due to the impact of COVID-19 causing restrained capital expenditure worldwide. In this environment, the business saw an increase in revenue by 1% from the same period of the previous fiscal year to 251.2 billion yen due primarily to an increase in residential air conditioners in Europe and North America due to increased time at home.

              Operating profit increased by 5.4 billion yen from the same period of the previous fiscal year to 21.9 billion yen due mainly to increased revenue.

Others

Revenue decreased by 7% from the same period of the previous fiscal year to 152.4 billion yen due primarily to decreases in services at affiliated companies.

Operating profit decreased by 2.7 billion yen from the same period of the previous fiscal year to 3.8 billion yen due mainly to decreased revenue.

Financial Standing

An analysis on the status of assets, liabilities and equity on a consolidated basis

Total assets as of the end of this fiscal quarter increased from the end of the previous fiscal year by 38.4 billion yen to 4,448.2 billion yen. The change in balance of total assets was mainly attributable to increases in cash and cash equivalents by 87.9 billion yen, inventories by 80.8 billion yen and other financial assets by 74.7 billion yen respectively, while trade receivables decreased by 190.2 billion yen.

Trade receivables decreased due primarily to credit collection for projects from the previous fiscal year and decreased revenue due to the impact of COVID-19. Cash and cash equivalents increased owing to borrowings made for the purpose of securing liquidity on hand to be prepared for a deterioration in balance caused by COVID-19.

Total liabilities decreased from the end of the previous fiscal year by 66.0 billion yen to 1,804.8 billion yen due primarily to decreases in trade payables by 42.8 billion yen and other current liabilities by 62.6 billion yen, while balances of bonds, borrowings and lease liabilities increased by 38.5 billion yen. Bonds and borrowings increased by 31.7 billion yen from the end of the previous fiscal year to 298.8 billion yen, with the ratio of bonds and borrowings to total assets recording 6.7%, representing a 0.6 point increase compared to the end of the previous fiscal year.

Mitsubishi Electric Corporation stockholders' equity increased by 103.0 billion yen compared to the end of the previous fiscal year to 2,532.7 billion yen. The stockholders' equity ratio was recorded at 56.9%, representing a 1.8 point increase compared to the end of the previous fiscal year. These changes mainly result from increases from recording a net profit attributable to Mitsubishi Electric Corporation stockholders of 107.7 billion yen and accumulated other comprehensive income by 77.3 billion yen mainly reflecting a rise in stock prices, despite a decrease due to dividend payment of 77.2 billion yen.

An analysis on the status of cash flow on a consolidated basis

Cash flows from operating activities for the first 9 months of fiscal 2021 was 316.8 billion yen (cash in), while cash flows from investing activities was 140.1 billion yen (cash out). As a result, free cash flow was 176.6 billion yen (cash in). Cash flows from financing activities was 94.1 billion yen (cash out), and cash and cash equivalents at end of period increased from the end of the previous fiscal year by 87.9 billion yen to 625.5 billion yen.

              Net cash provided by operating activities increased by 88.8 billion yen from the same period of the previous fiscal year due primarily to reduced use of materials and cost to deal with decreased revenue for the first 9 months of fiscal 2021, despite decreased profit.

              Net cash used in investing activities decreased by 8.1 billion yen from the same period of the previous fiscal year due mainly to a decrease in purchase of property, plant and equipment.

              Net cash used in financing activities increased by 2.3 billion yen from the same period of the previous fiscal year due primarily to decreased borrowings.

Forecast for Fiscal 2021(year ending March 31, 2021)

Mitsubishi Electric's business performance for fiscal 2021 is expected to exceed the company's previous forecast considering the improvement of the financial results primarily in Industrial Automation Systems and Home Appliances segments, although the impact of COVID-19 remains. As a result, the company's consolidated earnings forecast for fiscal 2021, ending March 31, 2021, has been revised from the announcement on October 29, 2020 as stated below.

Consolidated forecast for fiscal 2021

Exchange rates in and after the fourth quarter of fiscal 2021 is 103 yen to the U.S. dollar, which is 2 yen stronger from the previous announcement; 125 yen to the euro, which is 5 yen weaker from the company's previous announcement; and 16.0 yen to the Chinese yuan, which is 1 yen weaker from the previous announcement.

Consolidated Financial Results Summary

1. Consolidated 9 Months Results

 (In billions of yen except where noted)

2. Consolidated Third-quarter Results

                                                                                         (In billions of yen except where noted)

Notes:

1) Consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS).

2) The company has 205 consolidated subsidiaries.

Condensed Quarterly Consolidated Financial Statements

Condensed Quarterly Consolidated Statement of Profit or Loss and Condensed Quarterly Consolidated Statement of Comprehensive Income (First 9 Months, Fiscal 2021)

(Condensed Quarterly Consolidated Statement of Profit or Loss)

(In millions of yen)

(Condensed Quarterly Consolidated Statement of Comprehensive Income)

(In millions of yen)

Condensed Quarterly Consolidated Statement of Profit or Loss and Condensed Quarterly Consolidated Statement of Comprehensive Income (Third Quarter, Fiscal 2021)

(Condensed Quarterly Consolidated Statement of Profit or Loss)

(In millions of yen)

(Condensed Quarterly Consolidated Statement of Comprehensive Income)

(In millions of yen)

Condensed Quarterly Consolidated Statement of Financial Position

(In millions of yen)

Condensed Quarterly Consolidated Statement of Changes in Equity

FY' 20 First 9 Months (Apr. 1, 2019 - Dec. 31, 2019)

(In millions of yen)

FY '21 First 9 Months (Apr. 1, 2020 - Dec. 31, 2020)

(In millions of yen)

Condensed Quarterly Consolidated Statement of Cash Flows

(In millions of yen)

Consolidated Segment Information (First 9 Months, Fiscal 2021)

1. Revenue and Operating Profit by Business Segment

(In millions of yen)

*Notes: 1) Inter-segment revenue are included in the above chart.

            2) Gain on sales of land within other profit (loss) presented in the 'Condensed Quarterly Consolidated Statement of Profit or Loss' is allocated to each segment.

2. Revenue by Location of Customers

(In millions of yen)

Consolidated Segment Information (Third Quarter, Fiscal 2021)

1. Revenue and Operating Profit by Business Segment

(In millions of yen)

*Notes: 1) Inter-segment revenue are included in the above chart.

            2) Gain on sales of land within other profit (loss) presented in the 'Condensed Quarterly Consolidated Statement of Profit or Loss' is allocated to each segment.

2. Revenue by Location of Customers

(In millions of yen)

Notes to the Condensed Consolidated Financial Statements

(Notes regarding the going concern assumption)

Not applicable

(Notes if there is any significant change in Mitsubishi Electric Corp. stockholders' equity)

Not applicable

Cautionary Statement

While the statements herein including the forecast of the Mitsubishi Electric Group are based on assumptions the Group considers to be reasonable under the circumstances on the date of announcement, actual results may differ significantly from forecasts.

Such factors materially affecting the expectations expressed herein shall include but are not limited to the following:

(1)  Any change in worldwide economic and social conditions, as well as laws, regulations, taxation and other legislation

(2)  Changes in foreign currency exchange rates, especially JPY/U.S. dollar rates

(3)  Changes in stock markets, especially in Japan

(4)  Changes in balance of supply and demand of products that may affect prices and volume, as well as material procurement conditions

(5)  Changes in the ability to fund raising, especially in Japan

(6)  Uncertainties relating to patents, licenses and other intellectual property, including disputes involving patent infringement

(7)  New environmental regulations or the arising of environmental issues

(8)  Defects in products or services

(9)  Litigation and legal proceedings brought and contemplated against the Company or its subsidiaries and affiliates that may adversely affect operations or finances

(10)        Technological change, the development of products using new technology, manufacturing and time-to-market

(11)        Business restructuring

(12)        Incidents related to information security

(13)        Large-scale disasters including earthquakes, typhoons, tsunami, fires and others

(14)        Social or political upheaval caused by terrorism, war, pandemics, or other factors

(15)        Important matters related to the directors and executive officers, major shareholders and affiliated companies of Mitsubishi Electric Corporation

###

About Mitsubishi Electric Corporation

With 100 years of experience in providing reliable, high-quality products, Mitsubishi Electric Corporation (TOKYO: 6503) is a recognized world leader in the manufacture, marketing and sales of electrical and electronic equipment used in information processing and communications, space development and satellite communications, consumer electronics, industrial technology, energy, transportation and building equipment. Mitsubishi Electric enriches society with technology in the spirit of its "Changes for the Better," and environmental statement, "Eco Changes." The company recorded a revenue of 4,462.5 billion yen (U.S.$ 40.9 billion*) in the fiscal year ended March 31, 2020. For more information, please visit www.MitsubishiElectric.com

*U.S. dollar amounts are translated from yen at the rate of \109=U.S.$1, the approximate rate on the Tokyo Foreign Exchange Market on March 31, 2020

 Click on, or paste the following link into your web browser, to view the associated PDF document.
http://www.rns-pdf.londonstockexchange.com/rns/6803N_1-2021-2-2.pdf