Mitsubishi Electric : Announces Consolidated Financial Results for Fiscal 2021

MITSUBISHI ELECTRIC CORPORATION

PUBLIC RELATIONS DIVISION
7-3, Marunouchi 2-chome,Chiyoda-ku, Tokyo, 100-8310 Japan
FOR IMMEDIATE RELEASE	No. 3408
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Mitsubishi Electric Announces Consolidated Financial Results for Fiscal 2021

TOKYO, April 28, 2021 - Mitsubishi Electric Corporation(TOKYO: 6503) announced today its consolidated financial results for fiscal 2021 (April 1, 2020- March 31, 2021).

Consolidated Financial Results
Revenue:	4,191.4	billion yen	(6% decrease from the previous fiscal year)
Operating profit:	230.1	billion yen	(11% decrease from the previous fiscal year)
Profit before income taxes:	258.7	billion yen	(8% decrease from the previous fiscal year)
Net profit attributable to
Mitsubishi Electric Corp.		billion yen	(13% decrease from the previous fiscal year)
stockholders:	193.1

The economy in fiscal 2021 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 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.

Under these circumstances, the Mitsubishi Electric Group has been working even harder than before to promote growth strategies rooted in its advantages, while continuously implementing initiatives to strengthen its competitiveness and business structure.

Revenue

Revenue increased for the second half of fiscal 2021 but decreased in the annual results by 271.0 billion yen from the previous fiscal year to 4,191.4 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 automotive equipment business due to decreased demand for new cars in all regions except for China. The factory automation systems business remained substantially unchanged from the previous fiscal year due to an increase in demand relating to 5G and semiconductor despite stagnation in automotive-related demand worldwide and machinery- and building-related demand in Japan. Home Appliances segment saw a decrease in a part of air conditioners due to limited economic activities outside Japan and restrained capital expenditures worldwide. Meanwhile, there was some demand for residential air conditioners during stay-at-home period.

Operating Profit

Operating profit increased for the second half but decreased in the annual results by 29.4 billion yen from the previous fiscal year to 230.1 billion yen as operating profit decreased in all segments except for Energy and Electric Systems segment. Operating profit ratio decreased by 0.3% from the previous fiscal year to 5.5% due primarily to decreased revenue.

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The cost ratio increased by 0.3% from the previous fiscal year due primarily to lowered operation caused by decreased revenue of Industrial Automation Systems segment despite an improvement in Energy and Electric Systems segment due to a shift in project portfolios. Selling, general and administrative expenses decreased by 63.4 billion yen from the previous fiscal year due mainly to reduced cost, while selling, general and administrative expenses to revenue ratio remained substantially unchanged from the previous fiscal year. Other profit (loss) decreased by 4.9 billion yen from the previous fiscal year due primarily to increased loss on impairment of fixed assets, while other profit (loss) to revenue ratio remained substantially unchanged from the previous fiscal year.

Profit before income taxes

Profit before income taxes decreased by 23.2 billion yen from the previous fiscal year to 258.7 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 6.2%.

Net profit attributable to Mitsubishi Electric Corporation stockholders

Net profit attributable to Mitsubishi Electric Corporation stockholders decreased by 28.7 billion yen from the previous fiscal year to 193.1 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 previous fiscal year. Net profit attributable to Mitsubishi Electric Corporation stockholders to revenue ratio was 4.6%.

ROE decreased by 1.7% from the previous fiscal year to 7.5%.

Consolidated Financial Results by Business Segment

Energy and Electric Systems
Revenue:	1,270.2	billion yen	(3% decrease from the previous fiscal year which
			recorded 1,307.3 billion yen)
Operating profit:	108.9	billion yen	(26.6 billion yen increase from the previous fiscal year
			which recorded 82.3 billion yen)

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 previous fiscal year due primarily to decreases in the transportation systems and the power systems businesses in Japan, while revenue increased from the previous fiscal year due mainly to progress in orders already received for projects in the power systems business and an increase in the public utility 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 previous fiscal year due primarily to decreases in Asia and Japan.

As a result, revenue for this segment decreased by 3% from the previous fiscal year to 1,270.2 billion

yen.

Operating profit increased by 26.6 billion yen from the previous fiscal year to 108.9 billion yen due mainly to a shift in project portfolios and cost improvement.

Industrial Automation Systems
Revenue:	1,248.5	billion yen	(7% decrease from the previous fiscal year which
			recorded 1,349.4 billion yen)
Operating profit:	40.5	billion yen	(28.3 billion yen decrease from the previous fiscal year
			which recorded 68.9 billion yen)

The market of the factory automation systems business saw an increase in demand relating to 5G and semiconductor outside Japan and demand relating to increased mask production in China, while there was

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continuing stagnation in automotive-related demand worldwide and machinery- and building-related demand in Japan. In this environment, the business saw an increase in orders due primarily to an increase in demand relating to semiconductor and lithium-ion battery, while revenue remained substantially unchanged from 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 primarily in the first half. In this environment, the business saw decreases in both orders and revenue from 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 7% from the previous fiscal year to 1,248.5 billion

yen.

Operating profit decreased by 28.3 billion yen from the previous fiscal year to 40.5 billion yen due mainly to decreased revenue.

Information and Communication Systems
Revenue:	380.1	billion yen	(17% decrease from the previous fiscal year which
			recorded 455.5 billion yen)
Operating profit:	16.4	billion yen	(10.0 billion yen decrease from the previous fiscal year
			which recorded 26.4 billion yen)

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 previous fiscal year due mainly to a decrease in the system integrations business.

The electronic systems business saw decreases in both orders and revenue from 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 17% from the previous fiscal year to 380.1 billion

yen.

Operating profit decreased by 10.0 billion yen from the previous fiscal year to 16.4 billion yen due mainly to decreased revenue.

Electronic Devices
Revenue:	205.2	billion yen	(2% decrease from the previous fiscal year which
			recorded 208.7 billion yen)
Operating profit:	6.2	billion yen	(2.4 billion yen decrease from the previous fiscal year
			which recorded 8.7 billion yen)

The market of the electronic devices business saw a slowdown in demand for power modules used in railcar and industrial applications, while 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 previous fiscal year due primarily to an increase in power modules used in automotive applications, while revenue decreased by 2% from the previous fiscal year to 205.2 billion yen due mainly to decreases in TFT-LCD modules and power modules used in industrial and railcar applications despite an increase in high frequency and optical devices, particularly in optical communication devices.

Operating profit decreased by 2.4 billion yen from the previous fiscal year to 6.2 billion yen due mainly to decreased revenue.

Home Appliances
Revenue:	1,038.3	billion yen	(5% decrease from the previous fiscal year which
			recorded 1,090.2 billion yen)
Operating profit:	75.7	billion yen	(2.4 billion yen decrease from the previous fiscal year
			which recorded 78.2 billion yen)

The market of the home appliances business saw a decrease in demand for a part of air conditioners globally due primarily to the impact of COVID-19 causing lockdowns and considerable limitation of economic

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activities outside Japan, particularly in the first half, and restrained capital expenditure worldwide. Meanwhile, there was demand for residential air conditioners due to increased time at home. In this environment, the business saw a decrease in revenue by 5% from the previous fiscal year to 1,038.3 billion yen due primarily to a decrease in a part of air conditioners.

Operating profit decreased by 2.4 billion yen from the previous fiscal year to 75.7 billion yen due mainly to decreased revenue.

Others
Revenue:	603.0	billion yen	(9% decrease from the previous fiscal year which
			recorded 659.6 billion yen)
Operating profit:	13.6	billion yen	(12.4 billion yen decrease from the previous fiscal year
			which recorded 26.0 billion yen)

Revenue decreased by 9% from the previous fiscal year to 603.0 billion yen due primarily to decreases in services and engineering at affiliated companies.

Operating profit decreased by 12.4 billion yen from the previous fiscal year to 13.6 billion yen due mainly to decreased revenue.

Fundamental Dividend Distribution Policy and Fiscal 2021 Dividend

Fundamental dividend distribution policy

Mitsubishi Electric's fundamental policy is to comprehensively promote improvement in shareholder profit from the viewpoints of appropriate profit distribution commensurate with earnings performance of the respective fiscal year, as well as strengthening our financial standing through the company's internal reserves, with the ultimate goal of enhancing corporate value.

Fiscal 2021 dividend

Considering the company's business performance and financial conditions in fiscal 2021, the company has decided to pay a year-end retained earnings dividend of 26 yen per share for fiscal 2021. Adding the interim dividend of 10 yen per share, the total annual dividend will be 36 yen per share. Payment is planned to begin on June 2, 2021.

The retained earnings dividend for fiscal 2022 is still undecided.

cf. In fiscal 2020, interim dividend was 14 yen and year-end dividend was 26 yen per share. (Annual dividend of 40 yen per share)

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 year increased from the end of the previous fiscal year by 388.1 billion yen to 4,797.9 billion yen. The change in balance of total assets was mainly attributable to increases in cash and cash equivalents by 229.8 billion yen, and other financial assets by 91.2 billion yen. Working capital saw a decrease in the sum of trade receivables and contract assets by 63.0 billion yen, while inventories increased by 49.8 billion yen.

Cash and cash equivalents increased due to reduced use of materials and cost which exceeds a decrease in trade receivables reflecting decreased revenue for fiscal 2021. Other financial assets increased due primarily to an increase in investment securities mainly reflecting a rise in stock prices.

Total liabilities increased from the end of the previous fiscal year by 56.3 billion yen to 1,927.3 billion yen due primarily to an increase in other current liabilities by 68.9 billion yen, while balances of bonds, borrowings and lease liabilities decreased by 11.5 billion yen. Bonds and borrowings decreased by 18.1 billion yen from the end of the previous fiscal year to 248.8 billion yen, with the ratio of bonds and borrowings to total assets recording 5.2%, representing a 0.9 point decrease compared to the end of the previous fiscal year.

Mitsubishi Electric Corporation stockholders' equity increased by 324.5 billion yen compared to the end of the previous fiscal year to 2,754.2 billion yen. The stockholders' equity ratio was recorded at 57.4%,

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representing a 2.3 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 193.1 billion yen and accumulated other comprehensive income by 129.6 billion yen mainly reflecting a rise in stock prices and the yen depreciating against other currencies, 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 fiscal 2021 was 542.1 billion yen (cash in), while cash flows from investing activities was 176.5 billion yen (cash out). As a result, free cash flow was 365.5 billion yen (cash in). Cash flows from financing activities was 157.3 billion yen (cash out), and cash and cash equivalents at end of period increased from the end of the previous fiscal year by 229.8 billion yen to 767.4 billion yen.

Net cash provided by operating activities increased by 146.2 billion yen from the previous fiscal year due primarily to reduced use of materials and cost throughout fiscal 2021 and increased trade payables to deal with increased orders in the fourth quarter, despite decreased profit.

Net cash used in investing activities decreased by 27.4 billion yen from the previous fiscal year due mainly to a decrease in purchase of property, plant and equipment.

Net cash used in financing activities increased by 0.8 billion yen from the previous fiscal year.

Forecast for Fiscal 2022

The global economy in fiscal 2022 is expected to experience a progress in recovery in general as an effect of political measures in various countries and regions, particularly the U.S. and China, although the impact of COVID-19 on economy remains uncertain.

Under these circumstances, the Mitsubishi Electric Group aims to uplift the profitability of its main businesses by promoting its global operations. The Group also aims to further strengthen its business foundation by accelerating business model transformations with active exploration of open innovations, reinforcing its solution businesses for increasingly diverse social issues, and reviewing its business portfolios for higher profitability and more effective use of business resources.

The current financial performance forecast for fiscal 2022 follows below.

Current consolidated forecast for fiscal 2022	billion yen	(7% increase from fiscal 2021)
Revenue	4,470.0
Operating profit	260.0	billion yen	(13% increase from fiscal 2021)
Profit before income taxes	285.0	billion yen	(10% increase from fiscal 2021)
Net profit attributable to
Mitsubishi Electric Corp.		billion yen	(9% increase from fiscal 2021)
stockholders	210.0

Exchange rates for this forecast is 105 yen to the U.S. dollar, 125 yen to the euro and 16.5 yen to the Chinese yuan.

Note: The results forecast above is based on assumptions deemed reasonable by the company at the present time, and actual results may differ significantly from forecasts. Please refer to the cautionary statement at the end.

Policy Regarding Financial Reporting Standards

Mitsubishi Electric has voluntarily adopted International Financial Reporting Standards (IFRS) for its consolidated financial statements from the first quarter of the fiscal year ended March 31, 2019, in order to enhance international comparability of its financial information in the capital markets.

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