Mitsubishi Electric Announces Consolidated Financial Results
for the First 9 Months and Third Quarter of Fiscal 2022

TOKYO, February 2, 2022 - Mitsubishi Electric Corporation (TOKYO: 6503) announced today its consolidated financial results for the first 9 months and third quarter, ended December 31, 2021, of the current fiscal year ending March 31, 2022 (fiscal 2022).

1. Consolidated First 9 Months Results (April 1, 2021 - December 31, 2021)

The economy in the first 9 months of fiscal 2022, from April through December 2021, generally continued to see recovery in the corporate sector in the U.S., Europe and Japan. The household sector continued to recover in the U.S. and Europe. and recently recovered also in Japan owing to normalization of economic activities after experiencing the downward pressure stemming from the novel coronavirus diseases (COVID-19). China continued to see recovery in export and manufacturing, while the paces of recovery in the household sector slowed down. Overall, economic activities normalized due to the progress in COVID-19 vaccinations in various countries and regions, and global demand continued to expand as economy recovered owing partially to political measures. There was also the impact of material prices soaring as well as a prolonged components shortage.

Revenue

Revenue in the first 9 months increased by 240.6 billion yen from the same period of the previous fiscal year to 3,181.2 billion yen due primarily to increased revenue in Industrial Automation Systems, Home Appliances and Electronic Devices segments, despite decreased revenue in Energy and Electric Systems segment. Industrial Automation Systems segment saw an increase in the factory automation systems business due mainly to an increase in demand for capital expenditures relating to digital equipment and decarbonization worldwide. The automotive equipment business saw an increase in the first 9 months owing to recovery from the impact of COVID-19 in the first quarter, despite a decrease in and after the second quarter due mainly to a semiconductor shortage. Home Appliances segment increased due primarily to an increase in air conditioners primarily in Europe and North America, despite a decrease in air conditioners in Japan due mainly to a semiconductor shortage. Electronic Devices segment increased due primarily to recovery in demand for power modules.

Operating Profit

Operating profit increased by 52.4 billion yen from the same period of the previous fiscal year to 190.1 billion yen due mainly to increased operating profit in Industrial Automation Systems, Home Appliances and Electronic Devices segments, despite decreased operating profit in Energy and Electric Systems segment. Operating profit ratio improved by 1.3 point from the same period of the previous fiscal year to 6.0% due mainly to increased revenue.

The cost ratio improved by 1.1 point from the same period of the previous fiscal year due primarily to higher operating ratio caused by increased revenue of Industrial Automation Systems segment and the yen depreciating against other currencies, despite material prices soaring. Selling, general and administrative expenses increased by 50.3 billion yen from the same period of the previous fiscal year, but selling, general and administrative expenses to revenue ratio improved by 0.2 point. Other profit (loss) increased by 1.8 billion yen from the same period of the previous fiscal year, and other profit (loss) to revenue ratio remained substantially unchanged.

Profit before income taxes

Profit before income taxes increased by 48.8 billion yen from the same period of the previous fiscal year to 207.2 billion yen due primarily to an increase in operating profit. Profit before income taxes to revenue ratio was 6.5%.

Net profit attributable to Mitsubishi Electric Corporation stockholders

Net profit attributable to Mitsubishi Electric Corporation stockholders increased by 40.6 billion yen from the same period of the previous fiscal year to 148.4 billion yen due mainly to increased profit before income taxes. Net profit attributable to Mitsubishi Electric Corporation stockholders to revenue ratio was 4.7%.

Consolidated Financial Results by Business Segment (First 9 Months, Fiscal 2022)

Energy and Electric Systems

The market of the social infrastructure systems business saw a decrease in demand relating to power generation in Japan, and the reconsideration of the capital expenditure plans by railway companies in Japan 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 primarily to decreases in the power systems and the transportation systems businesses in Japan.

The market of the building systems business saw recovery from stagnation caused by the impact of COVID-19 primarily in China, while recovery is delayed in some parts of Asia. In this environment, the business saw increases in both orders and revenue from the same period of the previous fiscal year due primarily to an increase in China.

As a result, revenue for this segment decreased by 3% from the same period of the previous fiscal year to 843.8 billion yen.

Operating profit decreased by 25.7 billion yen from the same period of the previous fiscal year to 32.9 billion yen due mainly to decreased revenue and a shift in project portfolios.

Industrial Automation Systems

The market of the factory automation systems business saw a global increase in demand for capital expenditures relating to digital equipment such as semiconductor, electronic components and smartphones, as well as to decarbonization such as lithium-ion battery. 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 sales of new cars in all regions except for China in the first quarter due to a recovery from a slowdown stemming from COVID-19, while sales of new cars remained substantially unchanged in the first 9 months due primarily to a semiconductor shortage. In this environment, the business saw increases in both orders and revenue from the same period of the previous fiscal year due mainly to increases in electrical components and electric vehicle-related equipment such as motors and inverters.

As a result, revenue for this segment increased by 19% from the same period of the previous fiscal year to 1,058.6 billion yen.

Operating profit increased by 53.6 billion yen from the same period of the previous fiscal year to 81.9 billion yen due mainly to increased revenue and the yen depreciating against other currencies.

Information and Communication Systems

The market of the information systems and service business saw the restart of delayed system development projects, particularly in the manufacturing industry, while large-scale projects for the IT infrastructure service businesses decreased. 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 electronic systems business saw a decrease in orders from the same period of the previous fiscal year due primarily to a decrease in large-scale projects for the space systems business. Revenue also 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 8% from the same period of the previous fiscal year to 225.1 billion yen.

              Operating profit increased by 1.3 billion yen from the same period of the previous fiscal year to 7.3 billion yen due mainly to a shift in project portfolios.

Electronic Devices

The market of the electronic devices business saw recovery in demand for power modules used in industrial, consumer and automotive applications. In this environment, the business saw an increase in orders from the same period of the previous fiscal year and revenue also increased by 20% from the same period of the previous fiscal year to 179.0 billion yen due primarily to an increase in power modules used in industrial, consumer and automotive applications.

Operating profit increased by 4.4 billion yen from the same period of the previous fiscal year to 12.0 billion yen due mainly to increased revenue.

Home Appliances

The market of the home appliances business saw an increase in demand for residential air conditioners primarily in Europe and North America as working from home becomes common, although there was an impact of a semiconductor shortage. Demand for industrial air conditioners also recovered gradually as capital expenditures started to recover from the impact of COVID-19. In this environment, the business saw an increase in revenue by 12% from the same period of the previous fiscal year to 847.9 billion yen due mainly to an increase in air conditioners primarily in Europe and North America, despite a decrease in air conditioners in Japan.

              Operating profit increased by 9.1 billion yen from the same period of the previous fiscal year to 66.6 billion yen due mainly to increased revenue and the yen depreciating against other currencies.

Others

Revenue increased by 15% from the same period of the previous fiscal year to 486.5 billion yen due primarily to increases in materials procurement and logistics.

Operating profit increased by 8.8 billion yen from the same period of the previous fiscal year to 14.6 billion yen due mainly to increased revenue.

2. Consolidated Third-quarter Results (October 1, 2021 - December 31, 2021)

Revenue

Revenue in the third quarter increased by 4.2 billion yen from the same period of the previous fiscal year to 1,042.8 billion yen due primarily to increased revenue in Industrial Automation Systems and Electronic Devices segments, despite decreased revenue in Energy and Electric Systems and Information and Communication Systems segments. Industrial Automation Systems segment saw an increase in the factory automation systems business due mainly to an increase in demand for capital expenditures relating to digital equipment and decarbonization worldwide. Meanwhile, the automotive equipment business decreased as sales of new cars decreased globally due primarily to a semiconductor shortage. Electronic Devices segment increased due primarily to recovery in demand for power modules.

Operating Profit

Operating profit decreased by 23.9 billion yen from the same period of the previous fiscal year to 52.3 billion yen due mainly to decreased operating profit in Energy and Electric Systems and Home Appliances segments, although operating profit increased in Electronic Devices and Information and Communication Systems segments. Operating profit ratio deteriorated by 2.4 point from the same period of the previous fiscal year to 5.0% due primarily to deteriorated cost ratio.

The cost ratio deteriorated by 0.7 point from the same period of the previous fiscal year due mainly to the impact of material prices soaring on Home Appliances segment and a shift in project portfolios of Energy and Electric Systems segment, despite the yen depreciating against other currencies and higher operating ratio caused by increased revenue of Industrial Automation Systems and Electronic Devices segments. Selling, general and administrative expenses increased by 17.9 billion yen from the same period of the previous fiscal year, and selling, general and administrative expenses to revenue ratio deteriorated by 1.6 point. Other profit (loss) decreased by 0.1 billion yen from the same period of the previous fiscal year, and other profit (loss) to revenue ratio deteriorated by 0.1 point.

Profit before income taxes

Profit before income taxes decreased by 23.8 billion yen from the same period of the previous fiscal year to 58.8 billion yen due primarily to a decrease in operating profit. Profit before income taxes to revenue ratio was 5.6%.

Net profit attributable to Mitsubishi Electric Corporation stockholders

Net profit attributable to Mitsubishi Electric Corporation stockholders decreased by 15.9 billion yen from the same period of the previous fiscal year to 43.6 billion yen due mainly to decreased profit before income taxes. Net profit attributable to Mitsubishi Electric Corporation stockholders to revenue ratio was 4.2%.

Consolidated Financial Results by Business Segment (Third Quarter, Fiscal 2022)

Energy and Electric Systems

The market of the social infrastructure systems business saw an increase in demand relating to power systems outside Japan, but the reconsideration of the capital expenditure plans by railway companies in Japan due to the impact of COVID-19. 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 the power systems business outside Japan, while revenue decreased from the same period of the previous fiscal year due mainly to decreases in the power systems and the transportation systems businesses in Japan.

The market of the building systems business saw recovery from stagnation caused by the impact of COVID-19 primarily in China, while recovery is delayed in some parts of Asia. In this environment, the business saw increases in both orders and revenue from the same period of the previous fiscal year due mainly to an increase primarily in China.

As a result, revenue for this segment decreased by 7% from the same period of the previous fiscal year to 282.9 billion yen.

Operating profit decreased by 20.0 billion yen from the same period of the previous fiscal year to 12.3 billion yen due mainly to decreased revenue and a shift in project portfolios.

Industrial Automation Systems

The market of the factory automation systems business saw a global increase in demand for capital expenditures relating to digital equipment such as semiconductor, electronic components and smartphones, as well as to decarbonization such as lithium-ion battery. 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 a decrease in sales of new cars worldwide due primarily to a semiconductor shortage. 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.

As a result, revenue for this segment increased by 7% from the same period of the previous fiscal year to 366.4 billion yen.

Operating profit decreased by 0.1 billion yen from the same period of the previous fiscal year to 26.3 billion yen. Operating profit of the automotive equipment business decreased due primarily to decreased revenue and material prices soaring, while operating profit of the factory automation systems business increased due mainly to increased revenue.

Information and Communication Systems

The market of the information systems and service business saw the restart of delayed system development projects, particularly in the manufacturing industry, as well as an increase in the system integrations business. In this environment, the business saw increases in both orders and revenue from the same period of the previous fiscal year.

              The electronic systems business saw decreases in both orders and revenue from the same period of the previous fiscal year due primarily to a decrease in large-scale projects for the defense systems business.

              As a result, revenue for this segment decreased by 9% from the same period of the previous fiscal year to 70.9 billion yen.

              Operating profit increased by 1.5 billion yen from the same period of the previous fiscal year to 2.7 billion yen due mainly to a shift in project portfolios.

Electronic Devices

The market of the electronic devices business saw recovery in demand for power modules used in consumer and industrial applications. In this environment, the business saw an increase in orders from the same period of the previous fiscal year and revenue also increased by 21% from the same period of the previous fiscal year to 58.5 billion yen due primarily to an increase in power modules used in consumer and industrial applications.

Operating profit increased by 5.1 billion yen from the same period of the previous fiscal year to 6.8 billion yen due mainly to increased revenue.

Home Appliances

The market of the home appliances business saw an increase in demand for air conditioners outside Japan, primarily in Europe and North America, while a semiconductor shortage had an impact on the market of air conditioners in Japan. In this environment, revenue of the business remained substantially unchanged from the same period of the previous fiscal year, recording 252.3 billion yen due mainly to an increase in air conditioners primarily in Europe and North America, despite a decrease in air conditioners in Japan.

              Operating profit decreased by 13.6 billion yen from the same period of the previous fiscal year to 8.2 billion yen due mainly to material prices soaring.

Others

Revenue increased by 10% from the same period of the previous fiscal year to 167.4 billion yen due primarily to increases in materials procurement and logistics.

Operating profit increased by 2.6 billion yen from the same period of the previous fiscal year to 6.4 billion yen due mainly to increased 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 decreased from the end of the previous fiscal year by 62.4 billion yen to 4,735.4 billion yen. The change in balance of total assets was mainly attributable to decreases in trade receivables by 164.5 billion yen and cash and cash equivalents by 135.2 billion yen, while inventories increased by 206.6 billion yen.

Trade receivables decreased due mainly to credit collection for projects from the previous fiscal year. Inventories increased due primarily to recovery in demand for Industrial Automation Systems and Home Appliances segments, as well as shortages of semiconductors and other electronic components.

Total liabilities decreased from the end of the previous fiscal year by 119.6 billion yen to 1,807.6 billion yen due primarily to decreases in bonds, borrowings and lease liabilities by 27.3 billion yen, trade payables by 11.0 billion yen, and other current liabilities by 87.0 billion yen. Bonds and borrowings decreased by 18.4 billion yen from the end of the previous fiscal year to 230.4 billion yen, with the ratio of bonds and borrowings to total assets recording 4.9%, representing a 0.3 point decrease compared to the end of the previous fiscal year.

Mitsubishi Electric Corporation stockholders' equity increased by 57.2 billion yen compared to the end of the previous fiscal year to 2,811.5 billion yen. The stockholders' equity ratio was recorded at 59.4%, representing a 2.0 point increase compared to the end of the previous fiscal year. These changes referred to above primarily result from an increase from recording a net profit attributable to Mitsubishi Electric Corporation stockholders of 148.4 billion yen, despite a decrease due to dividend payment of 85.7 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 2022 was 117.1 billion yen (cash in), while cash flows from investing activities was 72.2 billion yen (cash out). As a result, free cash flow was 44.8 billion yen (cash in). Cash flows from financing activities was 191.4 billion yen (cash out), and cash and cash equivalents at end of period decreased from the end of the previous fiscal year by 135.2 billion yen to 632.1 billion yen.

              Net cash provided by operating activities decreased by 199.6 billion yen from the same period of the previous fiscal year due primarily to an increase in inventories despite increased profit.

              Net cash used in investing activities decreased by 67.8 billion yen from the same period of the previous fiscal year due mainly to an increase in proceeds from sale of investment securities and a decrease in purchase of property, plant and equipment in the first 9 months of fiscal 2022 as a result of restricted capital expenditures in the previous fiscal year.

              Net cash used in financing activities increased by 97.2 billion yen from the same period of the previous fiscal year due primarily to a decrease in proceeds of short-term borrowings and an increase in purchase of treasury stock.

Forecast for Fiscal 2022

Mitsubishi Electric's business performance for fiscal 2022 is expected to fall below the company's previous forecast considering the impact of material prices soaring and shortages of semiconductors and other electronic components, despite changes in exchange rates in response to the yen's depreciation. As a result, the company's consolidated earnings forecast for fiscal 2022, ending March 31, 2022, has been revised from the announcement on October 28, 2021 as stated below.

Based on a certain premise, the company has taken into consideration the impact of improper testing, including costs for additional inspections and strengthening the quality control system. Depending on the progress of future discussions with customers and investigations, the Group may incur losses exceeding its premise or relating to the discovery of any other improper quality-related conduct. If any potential impact comes to light, it will be disclosed promptly. For more information regarding improper testing, please see "Relevant documents" of "Restoring trust: Our roadmap for reform."

https://reform.mitsubishielectric.com/relevant-documents/

Consolidated forecast for fiscal 2022

Exchange rates in the fourth quarter of fiscal 2022 is 113 yen to the U.S. dollar, which is 3 yen weaker from the company's previous announcement; 128 yen to the euro, which is 3 yen weaker from the company's previous announcement; and 17.8 yen to the Chinese yuan, which is 0.8 yen weaker from the company's previous announcement.

Consolidated Financial Results Summary

1. Consolidated First 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 206 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 2022)

(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 2022)

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

(In millions of yen)

FY '22 First 9 Months (Apr. 1, 2021 - Dec. 31, 2021)

(In millions of yen)

Condensed Quarterly Consolidated Statement of Cash Flows

(In millions of yen)

Consolidated Segment Information (First 9 Months, Fiscal 2022)

1. Revenue and Operating Profit by Business Segment

(In millions of yen)

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

2. Revenue by Location of Customers

(In millions of yen)

Consolidated Segment Information (Third Quarter, Fiscal 2022)

1. Revenue and Operating Profit by Business Segment

(In millions of yen)

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

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

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

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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." The company recorded a revenue of 4,191.4 billion yen (U.S.$ 37.8 billion*) in the fiscal year ended March 31, 2021. For more information, please visit www.MitsubishiElectric.com

*U.S. dollar amounts are translated from yen at the rate of ¥111=U.S.$1, the approximate rate on the Tokyo Foreign Exchange Market on March 31, 2021

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