Mitsubishi Electric Corporation (TOKYO: 6503) announced today its financial results for the first 9 months and third quarter ending December 31, 2012, of the current fiscal year ending March 31, 2013 (fiscal 2013).
1. Consolidated First 9 Months Results (April 1, 2012 – December 31, 2012)
Net sales: 2,506.8 billion yen (2% decrease from the same period last year)
Operating income: 113.2 billion yen (30% decrease from the same period last year)
Income before income taxes: 25.7 billion yen (84% decrease from the same period last year)
Net income attributable to Mitsubishi Electric Corp.: 49.1 billion yen (40% decrease from the same period last year)
In the first 9 months of fiscal 2013, the business environment continued to be severe, despite the yen becoming weaker toward the end of 2012, with the global economy not showing a clear trend of recovery except for the U.S. and certain steady markets. Under these circumstances, consolidated net sales for the first 9 months of fiscal 2013 decreased by 2% compared to the same period of the previous fiscal year to 2,506.8 billion yen with decreased sales in the Industrial Automation Systems, Electronic Devices and Home Appliances segments. Consolidated operating income for the first 9 months of fiscal 2013 decreased by 30% compared to the same period of the previous fiscal year to 113.2 billion yen, mainly due to lower profits in the Industrial Automation Systems, Electronic Devices and Home Appliances segments. Income before income taxes decreased by 84% compared to the same period of the previous fiscal year to 25.7 billion yen largely as a result of recording 75.7 billion yen as a non-operating expense for refund of overcharged expenses to certain parties in the electronic systems business. Net income attributable to Mitsubishi Electric Corporation for the first 9 months of fiscal 2013 decreased by 40% compared to the same period of the previous fiscal year to 49.1 billion yen due to a decrease in tax expenses.
Consolidated Financial Results by Business Segment (First 9 months, Fiscal 2013)
Energy and Electric Systems
Total sales: 676.8 billion yen (3% increase from the same period last year)
Operating income: 48.9 billion yen (Unchanged from the same period last year)
The social infrastructure systems business saw a decrease in orders from the same period of the previous fiscal year due primarily to lower demand compared to the same period of the previous fiscal year in which the business experienced recovery demand from the Great East Japan Earthquake, while sales were unchanged from the same period of the previous fiscal year due to an increase in the power generation business worldwide. The building systems business experienced a decrease in orders compared to the same period of the previous fiscal year in which the business recorded large-scale projects outside Japan, while sales increased compared to the same period of the previous fiscal year owing to growth in demand for renewal of elevators and escalators in Japan as well as for new installations in China. As a result, total sales for this segment increased by 3% from the same period of the previous fiscal year. Operating income was unchanged from the same period of the previous fiscal year due to a shift in project portfolio and other factors.
Industrial Automation Systems
Total sales: 683.0 billion yen (6% decrease from the same period last year)
Operating income: 50.4 billion yen (33.2 billion yen decrease from the same period last year)
The factory automation systems business saw decreases in both orders and sales from the same period of the previous fiscal year mainly due to lower capital expenditures for semiconductor and flat panel display related investments in China, South 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 uplifting support from subsidies for eco-cars in the Japanese market as well as recovery in the North American market, despite stagnation in automobile sales in Europe. As a result, total sales for this segment decreased by 6% compared to the same period of the previous fiscal year.
Operating income decreased by 33.2 billion yen compared to the same period of the previous fiscal year due to decreases in sales and other factors.
Information and Communication Systems
Total sales: 357.9 billion yen (10% increase from the same period last year)
Operating income: 10.7 billion yen (1.9 billion yen increase 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 infrastructures. The information systems and services business saw no changes in sales from the same period of the previous fiscal year mainly due to declines in the IT infrastructure service business and the network and system operations business, and growth in the system integration business. The electronic systems business saw no changes in orders from the same period of the previous fiscal year, while sales increased from the same period of the previous fiscal year. As a result, total sales for this segment increased by 10% compared to the same period of the previous fiscal year. Operating income increased by 1.9 billion yen compared to the same period of the previous fiscal year mainly due to an increase in sales.
Electronic Devices
Total sales: 119.8 billion yen (22% decrease from the same period last year)
Operating income (loss): (3.2 billion yen) (10.3 billion yen decline from the same period last year)
The semiconductor business saw decreases in both orders and sales from the same period of the previous fiscal year due to a decline in demand mainly for power modules used in industrial, consumer and railcar applications. The LCD module business saw an increase in orders due to increases in industrial-use products and other factors, but sales decreased compared to the same period of the previous fiscal year. As a result, total sales for the segment decreased by 22% compared to the same period of the previous fiscal year. Operating income fell by 10.3 billion yen compared to the same period of the previous fiscal year mainly due to a decrease in sales.
Home Appliances
Total sales: 615.4 billion yen (5% decrease from the same period last year)
Operating income: 18.1 billion yen (6.3 billion yen decrease from the same period last year)
The home appliances business saw a 5% decrease in sales compared to the same period of the previous fiscal year due primarily to a large decline in demand for LCD televisions and blu-ray disc recorders for the Japanese market, as well as a decrease in air conditioners for Europe due to the strong yen against euros in the first half of the fiscal year. Operating income decreased by 6.3 billion yen compared to the same period of the previous fiscal year due to a decrease in sales and other factors.
Others
Total sales: 426.3 billion yen (5% decrease from the same period last year)
Operating income: 10.4 billion yen (1.1 billion yen decrease from the same period last year)
Sales decreased by 5% compared to the same period of the previous fiscal year mainly at affiliated companies involved in materials procurement and logistics. Operating income decreased by 1.1 billion yen compared to the same period of the previous fiscal year due primarily to a decrease in sales.
2. Consolidated Third-quarter Results (October 1, 2012 – December 31, 2012)
Net sales: 810.8 billion yen (1% decrease from the same period last year)
Operating income: 23.6 billion yen (51% decrease from the same period last year)
Income (loss) before income taxes: (47.0 billion yen) – Net income attributable to Mitsubishi Electric Corp.: 5.5 billion yen (56% decrease from the same period last year)
Consolidated net sales for this quarter decreased by 1% compared to the same period of the previous fiscal year to 810.8 billion yen, with sales decreases in the Energy and Electric Systems, Industrial Automation Systems and Electronic Devices segments. Consolidated operating income decreased by 51% compared to the same period of the previous fiscal year to 23.6 billion yen, due to a decline in income in the Energy and Electric Systems, Industrial Automation Systems, Information and Communication Systems and Electronic Devices segments. Income before income taxes recorded a loss of 47.0 billion yen largely as a result of recording 75.7 billion yen as a non-operating expense for refund of overcharged expenses to certain parties in the electronic systems business. Net income attributable to Mitsubishi Electric Corporation for this quarter decreased by 56% compared to the same period of the previous fiscal year to 5.5 billion yen due to a decrease in tax expenses.
Consolidated Financial Results by Business Segment (Third Quarter, Fiscal 2013)
Energy and Electric Systems
Total sales: 217.3 billion yen (1% decrease from the same period last year)
Operating income: 14.6 billion yen (5.6 billion yen decrease from the same period last year)
The social infrastructure systems business saw decreases in both orders and sales from the same period of the previous fiscal year due primarily to lower demand compared to the same quarter of the previous fiscal year in which the business experienced recovery demand from the Great East Japan Earthquake, despite orders for large-scale projects in Japan in the public utility systems and the rolling-stock equipment businesses. The building systems business experienced a decrease in orders compared to the same period of the previous fiscal year in which the business recorded large-scale projects outside Japan, while sales increased compared to the same quarter of the previous fiscal year owing to growth in demand for renewal of elevators and escalators in Japan as well as for new installations in China. As a result, total sales for this segment decreased by 1% 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 decrease in sales.
Industrial Automation Systems
Total sales: 226.1 billion yen (4% decrease from the same period last year) Operating income: 16.4 billion yen (10.6 billion yen decrease from the same period last year) The factory automation systems business saw decreases in both orders and sales compared to the same period of the previous fiscal year due primarily to lower capital expenditures for semiconductor and flat panel display related investments in China, South Korea and Taiwan.
The automotive equipment business saw a decrease in orders compared to the same period of the previous fiscal year due to continued stagnation in automobile sales in Europe and lower sales in China by Japanese automotive manufacturers, while sales were unchanged compared to the same period of the previous fiscal year.
As a result, total sales for this segment decreased by 4% compared to the same period of the previous fiscal year. Operating income decreased by 10.6 billion yen compared to the same period of the previous fiscal year due to a decrease in sales and other factors.
Information and Communication Systems
Total sales: 116.3 billion yen (6% increase from the same period last year) Operating income: 1.0 billion yen (3.5 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 due to growth in demand for communications infrastructures. The information systems and services business saw an increase in sales from the same period of the previous fiscal year mainly due to growth in the system integration business despite declines in the IT infrastructure service business and 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 to a decrease in large orders in the space systems business, while sales were unchanged from the same period of the previous fiscal year. As a result, total sales for this segment increased by 6% compared to the same period of the previous fiscal year. Operating income decreased by 3.5 billion yen compared to the same period of the previous fiscal year due to a shift in project portfolio and other factors.
Electronic Devices
Total sales: 39.9 billion yen (18% decrease from the same period last year)
Operating income (loss): (1.6 billion yen) (2.7 billion yen decline from the same period last year)
The semiconductor business saw an increase in orders from the same period of the previous fiscal year due to a gradual recovery in demand for power modules used in industrial, consumer and railcar applications, while sales decreased compared to the same period of the previous fiscal year. The LCD module business saw increases in both orders and sales compared to the same period of the previous fiscal year due to increases in industrial-use products and other factors. As a result, total sales for the segment decreased by 18% compared to the same period of the previous fiscal year. Operating income fell by 2.7 billion yen compared to the same period of the previous fiscal year mainly due to a decrease in sales.
Home Appliances
Total sales: 192.0 billion yen (1% increase from the same period last year)
Operating income: 1.3 billion yen (0.5 billion yen increase from the same period last year)
The home appliances business saw an increase in sales by 1% compared to the same period of the previous fiscal year mainly due to growth in demand for photovoltaic systems in Japan owing to the renewable energy feed-in tariff scheme despite a decline in demand for LCD televisions and blu-ray disc recorders for the Japanese market. Operating income increased by 0.5 billion yen compared to the same period of the previous fiscal year due to an increase in sales and other factors.
Others
Total sales: 140.6 billion yen (4% decrease from the same period last year) Operating income: 3.0 billion yen (0.6 billion yen decrease from the same period last year) Sales decreased by 4% compared to the same period of the previous fiscal year mainly at affiliated companies involved in materials procurement and logistics. Operating income decreased by 0.6 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 rose from the end of the previous fiscal year by 166.7 billion yen to 3,558.4 billion yen. This was due primarily to cash and cash equivalents increasing by 43.9 billion yen, while inventories also rose by 110.9 billion yen owing largely to increased work-in-process as recorded in commensurate with progress in job orders under pertinent contracts. The balance of outstanding debts and corporate bonds rose by 239.4 billion yen from the end of the previous fiscal year to 781.7 billion yen, with a rise in its ratio of interest bearing debt to total assets to 22.0% (an increase by 6.0 points compared to the end of the previous fiscal year). Trade payables decreased by 115.0 billion yen, and retirement and severance benefits decreased by 39.8 billion yen due primarily to a decrease in deficiency of pension assets resulting from a rise in stock prices and other factors.
Mitsubishi Electric Corporation shareholders’ equity increased by 56.3 billion yen compared to the previous fiscal year to 1,188.7 billion yen, with the ratio of shareholders’ equity to total assets unchanged compared to the end of the previous fiscal year at 33.4%. Retained earnings increased by 25.5 billion yen due to 49.1 billion yen recorded as net income attributable to Mitsubishi Electric Corporation and 23.6 billion yen as dividend payment, while accumulated other comprehensive income increased by 31.1 billion yen mainly due to weaker yen and a rise in stock prices.
Cash Flow
Cash flows from operating activities decreased by 75.1 billion yen compared to the same period of the previous fiscal year to 42.0 billion yen (cash out). Cash flows from investing activities increased by 20.2 billion yen compared to the same period of the previous fiscal year to 123.9 billion yen (cash out), largely due to an increase in loan receivables. Consequently, free cash flow totaled to payments of 165.9 billion yen. Cash flows from financing activities were 205.9 billion yen (cash in) due to an increase in bank loans and other factors.
Forecast for Fiscal 2013 (year ending March 31, 2013)
The current consolidated earnings forecast for fiscal 2013, ending March 31, 2013, is unchanged from the announcement on December 21, 2012 as stated below.
Consolidated earnings forecast for fiscal 2013
Current forecast
Net sales: 3,520.0 billion yen (3% decrease from fiscal 2012)
Operating income: 150.0 billion yen (33% decrease from fiscal 2012)
Income before income taxes: 40.0 billion yen (82% decrease from fiscal 2012)
Net income attributable to Mitsubishi Electric Corp.: 50.0 billion yen (55% decrease from fiscal 2012)
