Mitsubishi Electric Corporation announced its consolidated financial results for the first 9 months and third quarter, ended December 31, 2023, of the current fiscal year ending March 31, 2024 (fiscal 2024).
Consolidated First 9 Months Results (April 1, 2023 – December 31, 2023)
| Revenue: | 3,782.4 | billion yen | (6% increase year-on-year) |
| Operating profit: | 222.3 | billion yen | (36% increase year-on-year) |
| Profit before income taxes: Net profit attributable to | 249.0 | billion yen | (32% increase year-on-year) |
| Mitsubishi Electric Corp. stockholders: | 186.0 | billion yen | (34% increase year-on-year) |
The economy in the first 9 months of fiscal 2024, from April through December 2023, continued to see moderate recovery in Japan, however, recovery in consumer spending and capital expenditures came to a standstill recently. In the U.S., the economy continued to see recovery primarily in consumer spending despite monetary tightening and other factors. In China, the economy showed weakness in recovery due to sluggish export as well as slower domestic demand resulting from the real estate recession and other factors. In Europe, there were slowdowns in the corporate and household sectors due primarily to monetary tightening.
Revenue
Revenue increased by 217.1 billion yen year-on-year to 3,782.4 billion yen due primarily to the weaker yen and price hike. The Life segment saw an increase in the building systems business in Asia (excluding China), Japan and Europe, and the air conditioning systems & home products business also increased primarily in the first half of fiscal 2024 due to robust demand for air conditioners.
The Industry & Mobility segment saw a decrease in the factory automation systems business due mainly to a decline in demand for digital equipment and for products in the decarbonization area such as lithium-ion batteries, while the automotive equipment business saw increases primarily in electric vehicle-related equipment and electrical components.
In the Infrastructure segment, the public utility systems business saw increases in the transportation systems and public utility businesses worldwide. The energy systems business saw increases in the power distribution business worldwide and the power generation business outside Japan, and the defense & space systems business also increased due to large-scale projects for the defense systems and space systems businesses.
The Semiconductor & Device segment increased due to robust demand for power modules. The Business Platform segment saw increases in the system integrations and IT infrastructure service businesses.
Operating profit
Operating profit increased by 59.1 billion yen year-on-year to 222.3 billion yen due to increases in the Life, Industry & Mobility, Infrastructure and Business Platform segments, despite a decrease in the Semiconductor & Device segment. Operating profit ratio improved by 1.3 points year-on-year to 5.9% due mainly to an improvement in cost ratio.
The cost ratio improved by 1.9 points year-on-year due primarily to the weaker yen and price hike. Selling, general and administrative expenses increased by 66.4 billion yen year-on-year, and the selling, general and administrative expenses to revenue ratio deteriorated by 0.4 points year-on-year. Other profit (loss) decreased by 6.1 billion yen year-on-year, and other profit (loss) to revenue ratio deteriorated by 0.2 points year-on-year.
Profit before income taxes
Profit before income taxes increased by 59.9 billion yen year-on-year to 249.0 billion yen due primarily to an increase in operating profit. The profit before income taxes to revenue ratio was 6.6%.
Net profit attributable to Mitsubishi Electric Corporation stockholders
Net profit attributable to Mitsubishi Electric Corporation stockholders increased by 46.7 billion yen year-onyear to 186.0 billion yen due mainly to an increase in profit before income taxes. The net profit attributable to Mitsubishi Electric Corporation stockholders to revenue ratio was 4.9%.
Consolidated Financial Results by Business Segment (First 9 Months, Fiscal 2024)
Infrastructure
| Revenue: | 659.7 | billion yen | (7% increase year-on-year; recorded 614.6 billion yen) |
| Operating profit: | 2.1 | billion yen | (14.4 billion yen improvement year-on-year; recorded a loss of 12.2 billion yen) |
The market for the public utility systems business continued to see recovery in the global demand for the transportation systems area and robust investment in the public utility area worldwide. In this environment, orders won by the business increased year-on-year due primarily to increases in the transportation systems business worldwide and the public utility business outside Japan. Revenue also increased year-on-year due primarily to the weaker yen and increases in transportation systems and public utility businesses worldwide.
The market for the energy systems business continued to see capital expenditures of power companies in Japan and robust demand mainly for power supply stabilization worldwide in the expansion of renewable energy. In this environment, orders won by the business increased year-on-year due primarily to increases in the power generation business in Japan and the power distribution business worldwide. Revenue also increased year-on-year due primarily to the weaker yen and increases in the power distribution business worldwide and the power generation business outside Japan.
The defense & space systems business saw an increase in orders year-on-year due to an increase in large-scale projects for the defense systems business. Revenue also increased year-on-year due to an increase in largescale projects for the defense systems and space systems businesses.
As a result, revenue for this segment increased by 7% year-on-year to 659.7 billion yen. Operating profit improved by 14.4 billion yen year-on-year to 2.1 billion yen due primarily to a shift in project portfolios and the deterioration in profitability in the defense & space systems business in the previous fiscal year.
Industry & Mobility
- Revenue: 1,272.8 billion yen (5% increase year-on-year; recorded 1,212.2 billion yen)
- Operating profit: 94.7 billion yen (16.3 billion yen increase year-on-year; recorded 78.4 billion yen)
The market for the factory automation systems business saw a decrease in global demand for digital equipment such as semiconductors as well as for the decarbonization area such as lithium-ion batteries. In this environment, the business saw decreases in both orders and revenue year-on-year.
The market for the automotive equipment business saw a year-on-year increase in sales of new cars due mainly to an improvement in the supply of some semiconductor parts, and robust demand primarily for electric vehicle-related equipment in line with the expansion of the market centering on electric vehicles. In this environment, the business saw increases in both orders and revenue year-on-year due primarily to increases in electric vehicle-related equipment such as motors and inverters, electrical components and advanced driver assistance system (ADAS)-related products in addition to the weaker yen and price hike.
As a result, revenue for this segment increased by 5% year-on-year to 1,272.8 billion yen. Operating profit increased by 16.3 billion yen year-on-year to 94.7 billion yen due primarily to the weaker yen and price hike, despite a shift in product mix, increased costs and other factors.
Life
| Revenue: | 1,519.4 | billion yen | (6% increase year-on-year; recorded 1,430.6 billion yen) |
| Operating profit: | 104.4 | billion yen | (33.6 billion yen increase year-on-year; recorded 70.7 billion yen) |
The market for the building systems business continued to see recovery in the global demand. In this environment, the business saw increases in both orders and revenue year-on-year due primarily to the weaker yen and increases in Asia (excluding China), Japan and Europe.
The market for the air conditioning systems & home products business saw robust global demand for air conditioners due to decarbonization trends worldwide mainly in the first half of fiscal 2024. In this environment, the business saw an increase in revenue year-on-year due mainly to the weaker yen and price hike in addition to an increase in air conditioners in Europe and Asia.
As a result, revenue for this segment increased by 6% year-on-year to 1,519.4 billion yen. Operating profit increased by 33.6 billion yen year-on-year to 104.4 billion yen due primarily to the weaker yen, price hike and an improvement of logistics costs.
Business Platform
| Revenue: | 96.3 | billion yen | (5% increase year-on-year; recorded 91.4 billion yen) |
| Operating profit: | 5.4 | billion yen | (0.1 billion yen increase year-on-year; recorded 5.2 billion yen) |
The market for the information systems & network service business saw robust demand due to updates to legacy systems and digital transformation-related efforts. In this environment, the business saw an increase in orders due to increases in the system integrations and IT infrastructure service businesses. Revenue also increased by 5% year-on-year to 96.3 billion yen.
Operating profit increased by 0.1 billion yen year-on-year to 5.4 billion yen due mainly to an increase in revenue.
Semiconductor & Devices
- Revenue: 214.3 billion yen (3% increase year-on-year; recorded 208.8 billion yen)
- Operating profit: 24.6 billion yen (1.0 billion yen decrease year-on-year; recorded 25.7 billion yen)
The market for the semiconductor & device business saw robust demand for power modules used in railway & power transmission applications. In this environment, the business saw an increase in orders year-on-year due mainly to an increase in power modules used in railway & power transmission applications. Revenue for this segment also increased by 3% year-on-year to 214.3 billion yen due mainly to the weaker yen and an increase in power modules used in industrial and railway & power transmission applications.
Operating profit decreased by 1.0 billion yen year-on-year to 24.6 billion yen due mainly to increased costs.
Others
| Revenue: | 615.6 | billion yen | (1% increase year-on-year; recorded 609.4 billion yen) |
| Operating profit: | 21.9 | billion yen | (1.5 billion yen decrease year-on-year; recorded 23.4 billion yen) |
Revenue increased by 1% year-on-year to 615.6 billion yen due primarily to increases in materials procurement and software. Operating profit decreased by 1.5 billion yen year-on-year to 21.9 billion yen due mainly to a shift in project portfolios.
Consolidated Third-quarter Results (October 1, 2023 – December 31, 2023)
| Revenue: | 1,243.9 | billion yen | (1% increase year-on-year) |
| Operating profit: | 86.4 | billion yen | (5% increase year-on-year) |
| Profit before income taxes: Net profit attributable to | 89.2 | billion yen | (4% increase year-on-year) |
| Mitsubishi Electric Corp. stockholders: | 65.8 | billion yen | (2% increase year-on-year) |
Revenue
Revenue increased by 18.2 billion yen year-on-year to 1,243.9 billion yen due primarily to the weaker yen and price hike. In the Infrastructure segment, the public utility systems business saw an increase in the public utility business worldwide. The energy systems business saw increases in the power distribution business worldwide and the power generation business outside Japan, and the defense & space systems business also increased due to large-scale projects for the defense systems business.
The Industry & Mobility segment saw a decrease in the factory automation systems business due mainly to a decline in demand for digital equipment and for products in the decarbonization area such as lithium-ion batteries, while the automotive equipment business increased due to robust demand primarily for electric vehicle-related equipment and electrical components. The Business Platform segment saw increases in the system integration and IT infrastructure service businesses.
The Semiconductor & Device segment remained substantially unchanged year-on-year. The Life segment saw an increase in the building systems business in Japan, Asia (excluding China) and North America, while the air conditioning systems & home products business decreased due to a decline in demand for air conditioners.
Operating profit
Operating profit increased by 3.7 billion yen year-on-year to 86.4 billion yen due to increases in the Industry & Mobility, Infrastructure and Business Platform segments despite decreases in the Life and Semiconductor & Device segments. Operating profit ratio improved by 0.3 points year-on-year to 7.0% due mainly to an improvement in cost ratio.
The cost ratio improved by 1.4 points year-on-year due primarily to the weaker yen and price hike. Selling,
general and administrative expenses increased by 17.4 billion yen year-on-year, and the selling, general and administrative expenses to revenue ratio deteriorated by 1.1 points year-on-year. Other profit (loss) decreased by 2.2 billion yen year-on-year, and other profit (loss) to revenue ratio remained substantially unchanged year-on-year.
Profit before income taxes
Profit before income taxes increased by 3.2 billion yen year-on-year to 89.2 billion yen due primarily to an increase in operating profit. The profit before income taxes to revenue ratio was 7.2%.
Net profit attributable to Mitsubishi Electric Corporation stockholders
Net profit attributable to Mitsubishi Electric Corporation stockholders increased by 1.3 billion yen year-onyear to 65.8 billion yen due mainly to an increase in profit before income taxes. The net profit attributable to Mitsubishi Electric Corporation stockholders to revenue ratio was 5.3%.
Consolidated Financial Results by Business Segment (Third Quarter, Fiscal 2024)
Infrastructure
| Revenue: | 233.5 | billion yen | (10% increase year-on-year; recorded 212.6 billion yen) |
| Operating profit: | 11.0 | billion yen | (7.9 billion yen increase year-on-year; recorded 3.1 billion yen) |
The market for the public utility systems business continued to see recovery in the global demand for the transportation systems area and robust investment in the public utility area worldwide. In this environment, orders won by the business increased year-on-year due primarily to increases in the transportation systems business worldwide and the public utility business outside Japan. Revenue also increased year-on-year due primarily to the weaker yen and an increase in the public utility business worldwide.
The market for the energy systems business continued to see capital expenditures of power companies in Japan and robust demand primarily for power supply stabilization worldwide in the expansion of renewable energy. In this environment, orders won by the business decreased year-on-year due primarily to a decrease in the power generation business outside Japan, while revenue increased year-on-year due primarily to the weaker yen and increases in the power distribution business worldwide and the power generation business outside Japan.
The defense & space systems business saw increases in both orders and revenue year-on-year due to an increase in large-scale projects for the defense systems business. As a result, revenue for this segment increased by 10% year-on-year to 233.5 billion yen. Operating profit increased by 7.9 billion yen year-on-year to 11.0 billion yen due primarily to a shift in project portfolios and an increase in revenue.
Industry & Mobility
| Revenue: | 429.0 | billion yen | (3% increase year-on-year; recorded 417.2 billion yen) |
| Operating profit: | 44.8 | billion yen | (10.4 billion yen increase year-on-year; recorded 34.4 billion yen) |
The market for the factory automation systems business saw a decrease in global demand for digital equipment such as semiconductors as well as for the decarbonization area such as lithium-ion batteries. In this environment, the business saw decreases in both orders and revenue year-on-year.
The market for the automotive equipment business saw a year-on-year increase in sales of new cars due mainly to an improvement in the supply of semiconductor parts, and robust demand primarily for electric vehicle-related equipment in line with the expansion of the market centering on electric vehicles. In this environment, the business saw increases in both orders and revenue year-on-year due primarily to increases in electric vehicle-related equipment such as motors and inverters, electrical components and ADAS-related products in addition to the weaker yen and price hike.
As a result, revenue for this segment increased by 3% year-on-year to 429.0 billion yen. Operating profit in the factory automation systems business decreased due mainly to a decrease in revenue, while operating profit in the automotive equipment business improved due primarily to an increase in revenue and the price hike. As a result, operating profit for this segment increased by 10.4 billion yen yearon-year to 44.8 billion yen.
Life
| Revenue: | 472.2 | billion yen | (4% decrease year-on-year; recorded 490.4 billion yen) |
| Operating profit: | 25.8 | billion yen | (10.8 billion yen decrease year-on-year; recorded 36.6 billion yen) |
The market for the building systems business continued to see recovery in the global demand. In this environment, the business saw increases in both orders and revenue year-on-year due primarily to the weaker yen and increases in Japan, Asia (excluding China) and North America.
The market for the air conditioning systems & home products business saw a decrease in demand for air conditioners mainly in Europe and North America due primarily to stagnation in capital expenditures and housing starts. In this environment, the business saw a decrease in revenue year-on-year due mainly to a decrease in air conditioners in North America and Europe.
As a result, revenue for this segment decreased by 4% year-on-year to 472.2 billion yen. Operating profit decreased by 10.8 billion yen year-on-year to 25.8 billion yen due primarily to a decrease in revenue.
Business Platform
| Revenue: | 30.5 | billion yen | (5% increase year-on-year; recorded 29.0 billion yen) |
| Operating profit: | 1.5 | billion yen | (Substantially unchanged year-on-year; recorded 1.4 billion yen) |
The market for the information systems & network service business saw robust demand due to updates to legacy systems and digital transformation-related efforts. In this environment, the business saw a decrease in orders year-on-year due mainly to a decrease in the system integrations business, while revenue increased by 5% year-on-year to 30.5 billion yen due to increases in the system integrations and IT infrastructure service businesses.
Operating profit remained substantially unchanged year-on-year to 1.5 billion yen due mainly to a shift in project portfolios.
Semiconductor & Devices
- Revenue: 69.8 billion yen (1% decrease year-on-year; recorded 70.5 billion yen)
- Operating profit: 8.2 billion yen (2.6 billion yen decrease year-on-year; recorded 10.9 billion yen)
The market for the semiconductor & device business saw an increase in demand for power modules used in railway & power transmission applications, while demand for power modules used in consumer applications decreased. In this environment, the business saw a decrease in orders year-on-year due mainly to a decrease in power modules used in industrial and consumer applications, and revenue for this segment also decreased by 1% year-on-year to 69.8 billion yen.
Operating profit decreased by 2.6 billion yen year-on-year to 8.2 billion yen due mainly to a decrease in revenue and increased costs.
Others
| Revenue: | 207.0 | billion yen | (1% decrease year-on-year; recorded 209.7 billion yen) |
| Operating profit: | 8.3 | billion yen | (Substantially unchanged year-on-year; recorded 8.3 billion yen) |
Revenue decreased by 1% year-on-year to 207.0 billion yen due primarily to a decrease in logistics. Operating profit remained substantially unchanged year-on-year to 8.3 billion yen due mainly to a shift in project portfolios.
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 by 212.6 billion yen compared to the end of the previous fiscal year to 5,795.2 billion yen. The change in balance of total assets was mainly attributable to increases in inventories by 129.1 billion yen and other financial assets by 101.3 billion yen.
Inventories increased due primarily to the weaker yen and a change in demand for the Industry & Mobility and Life segments as well as progress in job orders under pertinent contracts.
Total liabilities increased by 42.2 billion yen compared to the end of the previous fiscal year to 2,261.5 billion yen due primarily to an increase in bonds, borrowings and lease liabilities by 163.3 billion yen, despite a decrease in trade payables by 84.6 billion yen. Bonds and borrowings increased by 168.1 billion yen compared to the end of the previous fiscal year to 420.3 billion yen, with the ratio of bonds and borrowings to total assets recording 7.3%, representing a 2.8 point increase compared to the end of the previous fiscal year.
Mitsubishi Electric Corporation stockholders’ equity increased by 165.5 billion yen compared to the end of the previous fiscal year to 3,404.5 billion yen due mainly to net profit attributable to Mitsubishi Electric Corporation stockholders of 186.0 billion yen and an increase in accumulated other comprehensive income of 103.8 billion yen, mainly reflecting the weaker yen and rise in stock prices, despite a decrease due primarily to a dividend payment of 96.9 billion yen. The stockholders’ equity ratio was 58.7%, representing a 0.7 point increase compared to the end of the previous fiscal year.
An analysis on the status of cash flow on a consolidated basis
Cash flows from operating activities for the first 9 months of fiscal 2024 were 198.9 billion yen (cash in), while cash flows from investing activities were 199.0 billion yen (cash out). As a result, free cash flow was 0.0 billion yen. Cash flows from financing activities were 22.0 billion yen (cash out), and cash and cash equivalents at the end of the period decreased by 0.2 billion yen compared to the end of the previous fiscal year to 645.6 billion yen.
Net cash provided by operating activities increased by 230.6 billion yen year-on-year due primarily to an increase in profit and a decrease in payment for inventories.
Net cash used in investing activities increased by 73.1 billion yen year-on-year due mainly to increases in purchase of investment securities and others and purchase of property, plant and equipment despite an increase in proceeds from sale of investment securities and others.
Net cash used in financing activities increased by 22.8 billion yen year-on-year due primarily to an increase in purchase of treasury stock and a decrease in proceeds of short-term borrowings, despite an increase in the proceeds of bonds and long-term borrowings.
Forecast for Fiscal 2024
The consolidated earnings forecast for fiscal 2024, ending March 31, 2024, is unchanged from the announcement on April 28, 2023 as stated below.
Current consolidated forecast for fiscal 2024
| Revenue: | 5,200.0 | billion yen | (4% increase year-on-year) |
| Operating profit: | 330.0 | billion yen | (26% increase year-on-year) |
| Profit before income taxes: Net profit attributable to Mitsubishi Electric Corp. | 355.0 | billion yen | (22% increase year-on-year) |
| stockholders: | 260.0 | billion yen | (22% increase year-on-year) |
Exchange rates for this forecast in the fourth quarter are 145 yen to the U.S. dollar (5 yen weaker than the previous forecast), 155 yen to the euro (5 yen weaker than the previous forecast) and 20.0 yen to the Chinese yuan (unchanged from the previous forecast).
Original – Mitsubishi Electric