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Mitsubishi Electric announces consolidated financial results for the first 9 months and third quarter of Fiscal 2014

Mitsubishi Electric Corporation (TOKYO: 6503) announced today its financial results for the first 9 months and third quarter ending December 31, 2013, of the current fiscal year ending March 31, 2014 (fiscal 2014). 1. Consolidated First 9 Months Results (April 1, 2013 – December 31, 2013) Net sales: 2,727.2 billion yen (9% increase from the … Continued

  • Mitsubishi Electric Corporation (TOKYO: 6503) announced today its financial results for the first 9 months and third quarter ending December 31, 2013, of the current fiscal year ending March 31, 2014 (fiscal 2014).

1. Consolidated First 9 Months Results (April 1, 2013 – December 31, 2013) Net sales: 2,727.2 billion yen (9% increase from the same period last year)
Operating income: 143.1 billion yen (26% increase from the same period last year)
Income before income taxes: 155.7 billion yen (6.05 times increase from the same period last year)
Net income attributable to Mitsubishi Electric Corp.: 94.8 billion yen (93% increase from the same period last year)

In the first 9 months of fiscal 2014, the business environment continued to recover owing to steady economic trends both in Japan and abroad, as well as the weaker yen advanced since the beginning of the third quarter, despite the economic downturn in some emerging markets.

Under these circumstances, consolidated net sales for the first 9 months of fiscal 2014 increased by 9% compared to the same period of the previous fiscal year to 2,727.2 billion yen with increased sales in the Energy and Electric Systems, Industrial Automation Systems, Electronic Devices and Home Appliances segments. Consolidated operating income increased by 26% compared to the same period of the previous fiscal year to 143.1 billion yen, due to increased profits in the Industrial Automation Systems, Electronic Devices and Home Appliances segments.

75.7 billion yen for refund of overcharged expenses to certain parties in the electronic systems business was recorded as a non-operating expense in the same period of the previous fiscal year.

Consolidated Financial Results by Business Segment (First 9 months, Fiscal 2014)

Energy and Electric Systems
Total sales: 735.9 billion yen (9% increase from the same period last year)
Operating income: 43.3 billion yen (5.6 billion yen decrease from the same period last year)
The social infrastructure systems business saw increases in both orders and sales compared to the same period of the previous fiscal year due primarily to an increase in orders for the public utility systems in Japan and the overseas rolling-stock equipment business.

The building systems business saw increases in both orders and sales compared to the same period of the previous fiscal year, owning to growth in the new installation and renewal of elevators and escalators in Japan and the new installation overseas mainly in China, as well as the weaker yen.

As a result, total sales for this segment increased by 9% from the same period of the previous fiscal year.
Operating income decreased by 5.6 billion yen from the same period of the previous fiscal year due primarily to a
shift in project portfolio and other factors.

Industrial Automation Systems

Total sales: 778.3 billion yen (14% increase from the same period last year)
Operating income: 71.3 billion yen (20.9 billion yen increase from the same period last year)
The factory automation systems business saw increases in both orders and sales from the same period of the previous fiscal year due to an increase in capital expenditures relating to smartphone and semiconductor, as well as the weaker yen.

The automotive equipment business saw increases in both orders and sales from the same period of the previous fiscal year primarily due to growth in the North American car sales market, as well as the weaker yen.

As a result, total sales for this segment increased by 14% compared to the same period of the previous fiscal year. Operating income increased by 20.9 billion yen compared to the same period of the previous fiscal year due to increases in sales and other factors.

Information and Communication Systems

Total sales: 355.1 billion yen (1% decrease from the same period last year)
Operating income: 3.3 billion yen (7.4 billion yen decrease from the same period last year)
The telecommunications equipment business saw increases in both orders and sales compared to the same period of the previous fiscal year owing primarily to an increase in demand for communications infrastructure products.
The information systems and service business experienced no change in sales from the same period of the previous fiscal year.
The electronic systems business saw an increase in orders compared to the same period of the previous fiscal year due to an increase in orders for large-scale projects in the electronics businesses. Sales, meanwhile, saw a decrease compared to the same period of the previous fiscal year due to a shift in large scale projects in the electronic and space systems business.

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 7.4 billion yen compared to the same period of the previous fiscal year mainly due to a shift in project portfolio and other factors.

Electronic Devices
Total sales: 135.0 billion yen (13% increase from the same period last year)
Operating income: 7.7 billion yen (11.0 billion yen improvement from the same period last year, turning into profit)
The semiconductor business saw increases in both orders and sales from the same period of the previous fiscal year due to an increase in demand mainly for power modules used in consumer, industrial 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 an increase in demand for automotive-use products.
As a result, total sales for this segment increased by 13% compared to the same period of the previous fiscal year. Operating income improved by 11.0 billion yen compared to the same period of the previous fiscal year and turned into profit due primarily to an increase in sales.

Home Appliances
Total sales: 667.0 billion yen (8% increase from the same period last year)
Operating income: 30.4 billion yen (12.2 billion yen increase from the same period last year)
The home appliances business saw an increase in sales by 8% compared to the same period of the previous fiscal year due primarily to an increase in air conditioners in Asian, European and North American markets; in air conditioners and photovoltaic systems in Japan, as well as the weaker yen.
Operating income increased by 12.2 billion yen compared to the same period of the previous fiscal year due to an increase in sales and other factors.

Others
Total sales: 472.9 billion yen (11% increase from the same period last year)
Operating income: 10.0 billion yen (0.3 billion yen decrease from the same period last year)
Sales increased by 11% compared to the same period of the previous fiscal year mainly at affiliated companies involved in materials procurement.
Operating income decreased by 0.3 billion yen compared to the same period of the previous fiscal year due primarily to the recognition of loss on impairment of long-lived assets.

2. Consolidated Third-quarter Results (October 1, 2013 – December 31, 2013)
Net sales: 915.3 billion yen (13% increase from the same period last year)
Operating income: 63.4 billion yen (2.69 times increase from the same period last year)

Income before income taxes: 72.3 billion yen –
Net income attributable to
Mitsubishi Electric Corp.: 46.5 billion yen (8.43 times increase from the same period last year)

Consolidated net sales for this quarter increased by 13% compared to the same period of the previous fiscal year to 915.3 billion yen, due primarily to increased sales in the Energy and Electric Systems, Industrial Automation Systems, Electronic Devices and Home Appliances segments. Consolidated operating income is 63.4 billion yen, 2.69 times increase from the same period of the previous fiscal year, with increased profits in the Energy and Electric Systems, Industrial Automation Systems, Electronic Devices and Home Appliances segments. 75.7 billion yen for refund of overcharged expenses to certain parties in the electronic systems business was recorded as a non-operating expense in the same period of the previous fiscal year.

Consolidated Financial Results by Business Segment (Third Quarter, Fiscal 2014)
Energy and Electric Systems
Total sales: 258.7 billion yen (19% increase from the same period last year)
Operating income: 24.9 billion yen (10.2 billion yen increase from the same period last year)

The social infrastructure systems business saw increases in both orders and sales from the same period of the previous fiscal year due to increases in the public utility systems business and power generation business in Japan, as well as the overseas rolling-stock business.

The building systems business experienced increases in both orders and sales compared to the same period of the previous fiscal year, owing to growth in the new installation and renewal of elevators and escalators in Japan and the new installation overseas mainly in China, as well as the weaker yen.

As a result, total sales for this segment increased by 19% from the same period of the previous fiscal
year. Operating income increased by 10.2 billion yen from the same period of the previous fiscal year due
primarily to an increase in sales and other factors.

Industrial Automation Systems

Total sales: 271.9 billion yen (20% increase from the same period last year)
Operating income: 32.4 billion yen (15.9 billion yen increase from the same period last year)
The factory automation systems business saw increases in both orders and sales from the same period of the previous fiscal year due to increases in capital expenditures relating to smartphone and semiconductor, and in facility replacement by manufactures in Japan, as well as the weaker yen.

The automotive equipment business saw increases in both orders and sales from the same period of the previous fiscal year primarily due to growth in the North American car sales market and increased sales in China by Japanese automotive manufactures, as well as the weaker yen.

As a result, total sales for this segment increased by 20% compared to the same period of the previous fiscal year. Operating income increased by 15.9 billion yen compared to the same period of the previous fiscal year due to an increase in sales and other factors.

Information and Communication Systems

Total sales: 112.6 billion yen (3% decrease from the same period last year)
Operating income: 0.1 billion yen (0.8 billion yen decrease from the same period last year)
The telecommunications equipment business saw increases in both orders and sales compared to the same period of the previous fiscal year owing primarily to an increase in demand for communications infrastructure products.
The information systems and service business experienced an increase in sales from the same period of the previous fiscal year.
The electronic systems business saw an increase in orders compared to the same period of the previous fiscal year due to an increase in orders for large-scale projects in the electronic businesses. Sales, meanwhile, decreased compared to the same period of the previous fiscal year due to a shift in large-scale projects in the electronic and the space businesses.

As a result, total sales for this segment saw a decrease by 3% compared to the same period of the
previous fiscal year. Operating income decreased by 0.8 billion yen from the same period of the previous fiscal
year mainly due to a decrease in sales.

Electronic Devices
Total sales: 44.4 billion yen (11% increase from the same period last year)
Operating income: 3.2 billion yen (4.9 billion yen improvement from the same period last
year, turning into profit)
The semiconductor business saw increases in both orders and sales from the same period of the previous fiscal year due to an increase in demand mainly for power modules used in consumer, industrial and railcar applications, as well as the weaker yen.

The LCD module business saw an increase in orders compared to the same period of the previous fiscal year due to an increase in demand for automotive-use products. Sales, meanwhile, decreased compared to the same period of the previous fiscal year.

As a result, total sales for the segment increased by 11% compared to the same period of the previous fiscal year. Operating income improved by 4.9 billion yen compared to the same period of the previous fiscal year and turned into profit due primarily to an increase in sales.

Home Appliances
Total sales: 207.0 billion yen (8% increase from the same period last year)
Operating income: 7.2 billion yen (5.9 billion yen increase from the same period last year)
The home appliances business saw an increase in sales by 8% compared to the same period of the previous fiscal year due primarily to an increase in air conditioners in Asian, European, North American and Japanese markets, as well as the weaker yen. Operating income increased by 5.9 billion yen compared to the same period of the previous fiscal year due to an increase in sales and other factors.

Others
Total sales: 165.4 billion yen (18% increase from the same period last year)
Operating income: 4.8 billion yen (1.8 billion yen increase from the same period last year)
Sales increased by 18% compared to the same period of the previous fiscal year mainly at affiliated companies involved in materials procurement.
Operating income increased by 1.8 billion yen compared to the same period of the previous fiscal year due to an increase in sales and other factors.

Financial Standing
An analysis on the status of assets, liabilities, equity and cash flow on consolidated basis

The Company’s total assets as of the end of this fiscal quarter increased from the end of the previous fiscal year by 3.7 billion yen to 3,414.1 billion yen. The change in the balance of total assets is mainly attributable to increases in the balances of cash and cash equivalents by 39.2 billion yen, and of work-in-process to be recorded in commensurate with progress in job orders under pertinent contracts by 131.6 billion yen, while trade receivables showed a decrease by 182.6 billion yen resulting from various factors including credit collection.

Total liabilities decreased from the same period of the previous fiscal year by 201.2 billion yen to 1,842.1 billion yen. The outstanding balances of debts and corporate bonds decreased by 114.3 billion yen, from the same period of the previous fiscal year, to 426.2 billion yen resulting in a decline in the ratio of interest bearing debt to total assets to 12.5% representing a 3.4 points decrease compared to the end of the previous fiscal year. The outstanding balance of trade payable decreased by 10.1 billion yen, and retirement and severance benefits increased by 83.7 billion yen, mainly owing to an increase in pension assets resulting from a rise in stock prices.

Mitsubishi Electric Corporation shareholders’ equity increased by 198.4 billion yen compared to the end of the previous fiscal year to 1,498.4 billion yen. Shareholders’ equity ratio, representing a 5.8 point increase compared to the end of the previous fiscal year, resulted in 43.9%. The above referred changes are primarily resulting from recording a net income attributable to Mitsubishi Electric Corporation of 94.8 billion yen, together with an increase in accumulated other comprehensive income by 129.8 billion yen backed by such factors as rising stock prices and the weaker yen, while 25.7 billion yen dividend payment took place.

Cash flows from operating activities increased by 306.6 billion yen compared to the same period of the previous fiscal year to 264.6 billion yen (cash in). Cash flows from investing activities decreased by 31.9 billion yen compared to the same period of the previous fiscal year to 91.9 billion yen (cash out) resulting from an increase in sales of investment securities. Consequently, free cash flow totaled 172.6 billion yen (cash in). Cash flows from financing activities were 151.1 billion yen (cash out) principally due to the repayment of bank loans.

Forecast for Fiscal 2014 (year ending March 31, 2014) The current consolidated earnings forecast for fiscal 2014, ending March 31, 2014, is revised from the previous
forecast announcement on October 31, 2013. We expect the improvement on non-operating profit and loss, due to an increase in equity in earnings of affiliated companies, foreign exchange gains and other factors.

Consolidated earnings forecast for fiscal 2014
Previous forecast (announced October 31)
Current forecast Net sales: 3,950.0 billion yen 3,950.0 billion yen (11% increase from fiscal 2013)
Operating income: 220.0 billion yen 220.0 billion yen (45% increase from fiscal 2013)
Income before income taxes: 200.0 billion yen 220.0 billion yen (3.38 times increase from fiscal 2013)

Net income attributable to Mitsubishi Electric Corp.: 120.0 billion yen 140.0 billion yen (2.01 times increase from fiscal 2013)

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