[February 01, 2012]

Mitsubishi Electric Announces Consolidated Financial Results for the First 9 Months and Third Quarter of Fiscal 2012

Mitsubishi Electric Corporation (TOKYO:6503) announced today its financial results for the first 9 months and third quarter ending December 31, 2011, of the current fiscal year ending March 31, 2012 (fiscal 2012).

1. Consolidated First 9 Months Results (April 1, 2011 - December 31, 2011)

In the first 9 months of fiscal 2012, the global economy saw a continued trend of gradual recovery both inside and outside Japan until the second quarter, while it experienced a recent downward trend with the yen remaining strong against US dollars and euros, in addition to a setback in the European and East Asian economy, tight supply of parts caused by the flood in Thailand and slowdown in Japanese production and exports.

Under these circumstances, consolidated net sales for the first 9 months of fiscal 2012 decreased by 2% compared to the same period of the previous fiscal year to 2,560.3 billion yen, with decreased sales in the Energy and Electric Systems and Home Appliances segments. Consolidated operating income for the first 9 months of fiscal 2012 decreased by 16% compared to the same period of the previous fiscal year to 161.7 billion yen, owing to income decreases in Energy and Electric Systems, Industrial Automation Systems, Information and Communication Systems and Home Appliances segments.

Net income attributable to Mitsubishi Electric (News - Alert) Corporation for the first 9 months of fiscal 2012 decreased by 30% compared to the same period of the previous fiscal year to 82.0 billion yen, due to tax costs of 32.0 billion yen resulting from a re-evaluation of deferred tax assets and liabilities for the reduction of corporate tax rates to be effective as of April 2012, which follows the promulgation in December 2011 of the "Act for Partial Revision of the Income Tax Act etc. for the Purpose of Creating Taxation System Responding to Changes in Economic and Social Structures" (Act No.114 of 2011) and the "Act on Special Measures for Securing Financial Resources Necessary to Implement Measures for Reconstruction Following the Great East Japan Earthquake" (Act No.117 of 2011).

Consolidated Financial Results by Business Segment (First 9 months, Fiscal 2012)

The social infrastructure systems business saw an increase in orders compared to the same period of the previous fiscal year due to growth in Japan as well as increases in large projects overseas for the energy systems business, while sales decreased compared to the same period of the previous fiscal year due to decreases in the Japanese rolling-stock equipment and public utility systems businesses.

The building systems business experienced increases in both orders and sales compared to the same period of the previous fiscal year, owing to a growth in demand for elevators and escalators in the Chinese and ASEAN markets, as well as large projects recorded for China, Korea and the Middle East.

As a result, total sales for this segment decreased by 2% from the same period of the previous fiscal year. Operating income also decreased from the same period of the previous fiscal year by 9.3 billion yen due to decreases in sales and other factors.

The factory automation systems business saw orders unchanged from the same period of the previous fiscal year, while sales increased compared to the same period of the previous fiscal year due to stable demand for smartphone and tablet PC related investments mainly in Asia.

The automotive equipment business also saw increases in both orders and sales compared to the same period of the previous fiscal year due to expansion of emerging markets such as China and India and recovery in North America, despite impacts from the Great East Japan Earthquake and the flood in Thailand.

As a result, total sales for this segment increased by 5% compared to the same period of the previous fiscal year. Operating income decreased by 4.4 billion yen compared to the same period of the previous fiscal year due primarily to an increase in cost ratio as a result of strong yen.

The telecommunications equipment business saw an increase in orders compared to the same period of the previous fiscal year due to large orders recorded for submarine line terminal equipment for fiber-optic cable networks, while sales were unchanged from the same period of the previous fiscal year.

The information systems and services business saw no changes in sales from the same period of the previous fiscal year mainly due to a decline in the IT infrastructure service business and growth mainly in the network and system operations business.

The electronic systems business saw a decrease in orders from the same period of the previous fiscal year due primarily to a decrease in the number of large projects in the electronics business, while sales were unchanged from the same period of the previous fiscal year.

As a result, total sales for this segment increased by 1% compared to the same period of the previous fiscal year. Operating income decreased by 2.1 billion yen compared to the same period of the previous fiscal year mainly due to a shift in sales components.

The semiconductor business saw a decrease in orders compared to the same period of the previous fiscal year due to a decline in demand mainly for industrial-use power modules, high-frequency and optical transmission devices, while sales increased for power modules for industrial, commercial, automotive and railcar applications.

The LCD module business saw increases in both orders and sales compared to the same period of the previous fiscal year due to growth in demand for industrial and automotive applications.

As a result, total sales for the segment increased by 18% compared to the same period of the previous fiscal year. Operating income increased by 2.5 billion yen compared to the same period of the previous fiscal year mainly due to an increase in sales.

The home appliances business saw a 9% decrease in sales compared to the same period of the previous fiscal year due to, despite increases in overseas air conditioners, impact from the change in the eco-point incentive program in the third fiscal quarter the previous year which caused a last minute surge in demand for LCD televisions, room air conditioners and refrigerators for the Japanese market, in addition to decreases in overseas photovoltaic systems mainly in Europe as well as hot water supply systems and induction heating cooking systems for the Japanese market.

Operating income decreased by 19.2 billion yen compared to the same period of the previous fiscal year due to a decrease in sales and other factors.

Sales increased by 1% compared to the same period of the previous fiscal year mainly at affiliated companies involved in materials procurement and engineering.

Operating income increased by 2.3 billion yen compared to the same period of the previous fiscal year due primarily to an increase in sales.

2. Consolidated Third-quarter Results (October 1, 2011 - December 31, 2011)

Consolidated net sales for this quarter decreased by 8% compared to the same period of the previous fiscal year to 816.7 billion yen, with sales decreases in the Energy and Electric Systems, Industrial Automation Systems and Home Appliances segments. Consolidated operating income decreased by 40% compared to the same period of the previous fiscal year to 48.1 billion yen, due to a decline in income in the Energy and Electric Systems, Industrial Automation Systems, Electronic Devices and Home Appliances segments.

Net income attributable to Mitsubishi Electric Corporation for this quarter decreased by 73% compared to the same period of the previous fiscal year to 12.4 billion yen, due to tax costs of 32.0 billion yen resulting from a re-evaluation of deferred tax assets and liabilities for the reduction of corporate tax rates to be effective as of April 2012, which follows the promulgation in December 2011 of the "Act for Partial Revision of the Income Tax Act etc. for the Purpose of Creating Taxation System Responding to Changes in Economic and Social Structures" (Act No.114 of 2011) and the "Act on Special Measures for Securing Financial Resources Necessary to Implement Measures for Reconstruction Following the Great East Japan Earthquake" (Act No.117 of 2011).

Consolidated Financial Results by Business Segment (Third Quarter, Fiscal 2012)

The social infrastructure systems business saw a decrease in both orders and sales compared to the same period of the previous fiscal year due to decreases mainly in the rolling-stock equipment business both inside and outside Japan and the public utility systems business in Japan.

The building systems business saw no changes in orders compared to the same period of the previous fiscal year, while it experienced increased sales owing to large orders recorded for elevators and escalators in Japan, as well as growth in the Chinese and ASEAN markets.

As a result, total sales for this segment decreased by 4% from the same period of the previous fiscal year. Operating income decreased by 5.3 billion yen from the same period of the previous fiscal year due primarily to a decrease in sales.

The factory automation systems business saw decreases in both orders and sales compared to the same period of the previous fiscal year due to a decline in demand mainly for flat panel display-related investments in Korea and Taiwan.

The automotive equipment business saw increases in both orders and sales compared to the same period of the previous fiscal year with Japanese automotive manufacturers experiencing recovery in production from impacts caused by the Great East Japan Earthquake, and economic recovery in North America, despite impacts from the flood in Thailand.

As a result, total sales for this segment decreased by 1% compared to the same period of the previous fiscal year. Operating income decreased by 9.8 billion yen compared to the same period of the previous fiscal year due to a decrease in sales and other factors.

The telecommunications equipment business saw increases in both orders and sales compared to the same period of the previous fiscal year due to growth in demand for communications infrastructures.

The information systems and services business saw a decrease in sales from the same period of the previous fiscal year mainly due to a decline mainly in the IT infrastructure service business.

The electronic systems business saw an increase in orders due to growth in the space systems business, as well as an increase in sales owing to growth in the electronics business.

As a result, total sales for this segment increased by 5% compared to the same period of the previous fiscal year. Operating income increased by 0.7 billion yen compared to the same period of the previous fiscal year due to an increase in sales and other factors.

The semiconductor business saw a decrease in orders compared to the same period of the previous fiscal year due to a decline in demand mainly for industrial-use power modules, high-frequency and optical transmission devices, while sales increased for power modules for industrial, commercial, automotive and railcar applications.

The LCD module business saw increases in both orders and sales compared to the same period of the previous fiscal year due to growth in demand for industrial and automotive applications.

As a result, total sales for the segment increased by 11% compared to the same period of the previous fiscal year. Operating income decreased by 0.4 billion yen compared to the same period of the previous fiscal year mainly due to impacts from the strong yen.

The home appliances business saw a 23% decrease in sales compared to the same period of the previous fiscal year due to impacts from the change in the eco-point incentive program in the third fiscal quarter the previous year which caused a last minute surge in demand for LCD televisions, room air conditioners and refrigerators for the Japanese market, in addition to decreases in overseas air conditioners resulting from a slowdown in the European economy, overseas photovoltaic systems also mainly in Europe as well as hot water supply systems and induction heating cooking systems for the Japanese market.

Operating income fell by 16.4 billion yen compared to the same period of the previous fiscal year due to a decrease in sales and other factors.

Sales decreased by 3% compared to the same period of the previous fiscal year mainly at affiliated companies involved in materials procurement and logistics.

Operating income decreased by 0.1 billion yen compared to the same period of the previous fiscal year due primarily to a decrease in sales.

Financial Condition (Consolidated Basis)

Assets, Liabilities, and Shareholders' Equity

The company's total assets fell from the end of the previous fiscal year by 144.2 billion yen to 3,188.4 billion yen. This was due primarily to cash and cash equivalents decreasing by 165.7 billion yen and trade receivables decreasing by 64.0 billion yen mainly as a result of credit collection, while inventories increased by 138.4 billion yen owing largely to progress in work-in-process.

The balance of outstanding debts and corporate bonds fell by 33.0 billion yen from the end of the previous fiscal year to 451.3 billion yen, with a decline in its ratio of interesting bearing debt to total assets to 14.2% (a decrease by 0.3 points compared to the end of the previous fiscal year). Trade payables also decreased by 65.3 billion yen, while retirement and severance benefits increased by 26.2 billion yen, due primarily to an increase in deficiency of pension assets resulting from a decline in stock prices and other factors.

Mitsubishi Electric Corporation shareholders' equity decreased by 6.0 billion yen compared to the previous fiscal year to 1,044.2 billion yen, with an improvement in ratio of shareholders' equity to total assets of 1.3 points compared to the previous fiscal year, bringing the ratio to 32.8%. Retained earnings increased by 54.1 billion yen due to an 82.0 billion yen net income attributable to Mitsubishi Electric Corporation and dividend payment of 27.9 billion yen, while accumulated other comprehensive income decreased by 57.8 billion yen mainly due to the yen appreciating against foreign currencies and the decline in stock prices.

Cash Flow

Cash flows from operating activities decreased by 148.4 billion yen compared to the same period of the previous fiscal year to 33.1 billion yen (cash in). Cash flows from investing activities decreased by 9.7 billion yen compared to the same period of the previous fiscal year to 103.6 billion yen (cash out), largely due to a decrease in investments on securities. Consequently, free cash flow reached payments of 70.4 billion yen. Cash flows from financing activities were 79.6 billion yen (cash out) due to repayment of loans, payment of dividends and other factors.

Forecast for Fiscal 2012 (year ending March 31, 2012)

The current consolidated earnings forecast for fiscal 2012, ending March 31, 2012, is expected to fall below the previous forecast in nets sales and operating income as stated below, with decreased revenues in the Energy and Electric Systems, Industrial Automation Systems and Home Appliances segments due to a slowdown in the European and East Asian economies, stronger yen and tight supply of parts following the flood in Thailand. The forecast for income before income taxes has been unchanged from the previous forecast due primarily to a decrease in other expenses, while net income attributable to Mitsubishi Electric Corporation is expected to fall below its previous forecast due to tax costs mainly as a result of "Act for Partial Revision of the Income Tax Act etc. for the Purpose of Creating Taxation System Responding to Changes in Economic and Social Structures."

The impact to the company's business performance in relation to announcements made on January 27, 2012 regarding "Overcharged expenses to Japan's Ministry of Defense, Cabinet Satellite Intelligence Center and Japan Aerospace Exploration Agency," "Suspension from Ministry of Defense Bidding," "Suspension from Japan's Cabinet Satellite Intelligence Center Bidding" and "Suspension of Participating Eligibility from Japan Aerospace Exploration Agency Competitive Bidding" is currently unclear and has not been considered in the current forecast. Mitsubishi Electric intends to disclose the impact this matter has on the company as soon as the situation is better understood.

Cautionary Statement

The expectation of operating results herein and any associated statement to be made orally with respect to the company's current plans, estimates, strategies and beliefs and any other statements that are not historical facts are forward-looking statements. Words such as "expects", "anticipates", "plans", "believes", "scheduled", "estimated", "targeted" along with any variations of these words and similar expressions are intended to identify forward-looking statements which include but are not limited to projections of revenues, earnings, performance and production. While the statements herein are based on certain assumptions and premises that the company trusts and considers to be reasonable under the circumstances to the date of announcement, you are requested to kindly take note that actual operating results are subject to change due to any of the factors as contemplated hereunder and/or any additional factor unforeseeable as of the date of this announcement. Such factors materially affecting the expectations expressed herein shall include but are not limited to the following:

Notes

1. Change of status in material affiliates in this quarterly period: none

About Mitsubishi Electric

With over 90 years of experience in providing reliable, high-quality products to both corporate clients and general consumers all over the world, 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. The company recorded consolidated group sales of 3,645.3 billion yen (US$ 43.9 billion*) in the fiscal year ended March 31, 2011. For more information visit http://www.MitsubishiElectric.com

*At an exchange rate of 83 yen to the US dollar, the rate given by the Tokyo Foreign Exchange Market on March 31, 2011

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