Mitsubishi Electric Group House Journal

Vol. 004

PLUS

Dec.2014

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Masaki Sakuyama
President & CEO

work. I am confident that everyone will continue

to work hard and rise to the various challenges
for the rest of the year.
For the full fiscal year (Apr. 2014 through Mar.
2015), we have raised the forecast announced
in April, aiming to reach net sales of 4,220 billion
yen and operating income of 275 billion yen
(operating income ratio of 6.5%), both of which
are expected to mark the highest-ever in our
history.

Business Strategy Briefing Session

Results for the first half of FY2015

and our aims to achieve best-ever
results for FY2015
Consolidated net sales for the first half of
FY2015 (Apr. through Sep. 2014) totaled
1,972.8 billion yen and operating income was
121.3 billion yen, with an operating income ratio
of 6.2%. Sales increased from the same period
of the previous fiscal year in all segments. Even
if we eliminate the effects of the fluctuation in
foreign exchange rates, we still achieved some
7% increase compared to the same period of
the previous fiscal year. This clearly shows what
has been achieved through everyone's hard

On November 10, we announced our policy on

how we will achieve the growth targets of "5
trillion yen or more in consolidated net sales"
and "operating income ratio of 8% or higher" by
FY2021 at the latest.

To achieve our growth targets

To earn the additional 1 trillion yen in our
target to reach 5 trillion yen or more in net
sales, we will grow our business in all business
areas, but we especially need to expand business segments that comprise a large volume of
our net sales, namely Energy and Electric Sys-

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Overview of financial results (consolidated)

Operating income
(Operating income ratio)

Income before income taxes

Net income attributable to
Mitsubishi Electric Corp.

FY15 1st Half

FY15 full year forecast

Announced
on July 30

Actual result

FY14
full year
actual result

1,811.8

1,980.0

1,972.8

4,054.3

4,220.0

4,220.0

89.6

79.7

100.0

121.3

235.1

260.0

275.0

(6.5%)

(5.3%)

(4.4%)

(5.1%)

(6.2%)

(5.8%)

(6.2%)

(6.5%)

105.8

72.7

83.4

110.0

145.9

248.9

260.0

285.0

69.5

43.6

48.3

80.0

97.8

153.4

175.0

190.0

FY12
1st half

Net sales

(In billions of yen)

FY13
1st half

FY14
1st half

1,743.5

1,696.0

113.6

Announced
on July 30

Current
forecast

growth targets in each business, taking into consideration the growth potential of the particular
market and our competitive advantages. Phase
2 will run three years from April 2015, where we
will further enhance our growth-driving businesses. Additionally, to sow the seeds for future
growth, we will begin working on future-oriented
R&D and strengthen our structures that support
cross-business collaboration so we can create
solutions businesses centered on the Information Systems & Network Service Division
launched in April. And finally, in Phase 3, which
will run three years from April 2018, we will
develop our key growth-driving businesses into
world-leading operations. At the same time, looking into FY2021 and beyond, we will consolidate
sustainable growth by creating new and strong
businesses and by promoting the provision of
value-adding through our solutions business.
With these policy settings, I am eager to work
together with everyone in the Mitsubishi Electric
Group to achieve the growth targets by "continuing our Balanced Corporate Management initiatives and aiming for sustainable growth," while
maintaining our robust business structure.

tems, Industrial Automation Systems and Home

Appliances. In terms of the regional aspect, we
will secure around half of the additional 1 trillion
yen in Japan, which is the base upon which our
business grows, and in Europe, North America
and China, where our business networks
already extend. The other half will be earned in
emerging markets.
To achieve the target of an operating income
ratio of 8% or higher, we will aim for stable
growth, raising the operating income in our
built-on-order businesses, where demand is
easy to predict, and in our mass-production
businesses, which experience relatively large
fluctuations in demand, at a ratio of 1:2. Our
built-on-order businesses include Energy and
Electric Systems and Information and Communication Systems, while our mass-production
businesses are Industrial Automation Systems,
Electronic Devices and Home Appliances.

Progress in three phases

Our future progress can be divided into three
phases: "setting targets", "developing
actions" and "achieving outcomes." The current fiscal year is Phase 1, where we will set

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Beijing

CHINA

We received a report from China, written by

Takaaki Kukita who is our representative in
China and President of Mitsubishi Electric
(China) Co., Ltd. (MEC).

Test train of
the Tokaido Shinkansen in 1964

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Stories of Transportation Systems

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On November 10, we announced the details of our business strategies on how we will achieve our
growth targets.

Mitsubishi Electric started manufacturing its first rolling stock

systems in 1922, and to date, we have delivered systems for
approximately 38,000 railcars to 29 countries around the
world.

Maintain Balanced Corporate Management

Toward a Higher Level of Growth
for Sustainable Growth
Ensure High-Quality Growth
5,000
billion yen
or more

Growth Targets to be Achieved by FY2021

Net Sales
OPM*

5 trillion yen or more

8% or more (Previously 5% or more)

Management Targets to be
Continuously and Stably Achieved
10% or more
ROE
Debt Ratio 15% or less
Continuous investment

towards growth target

(R&D, capital investment)
M&A, etc.

*Operating profit margin

4,054.3

Sales Composition
(Outlook)

4,220.0

Others
Home Appliances
Electronic Devices
Information &

OPM Target
by Segment

23%

6% or more

5%
11%

7% or more
5% or more

30%

13% or more

29%

8% or more

Communication
Systems

Industrial

Automation Systems

Energy &

Shanghai

Historic Royal Palaces

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The sequel to the introduction of
Mitsubishi Electrics European
philanthropic activities focuses on the
activities in U.K., Poland and Russia.

Electric Systems

2014
Actual

Global Expansion

2015
Forecast

2021
(at the latest)

(FY)

Key Initiatives in Global Expansion

Reinforce business networks in target markets
Develop global supply bases

Japan

Emerging
Markets

Achieve greater competitiveness while

increasing the scale of operations

Achieve stable growth and greater profitability

as a core operating region to drive business
expansion
Develop sales channels, streamline distribution,
promote a shift to local production and
development and enhance brand recognition,
thereby achieving greater competitiveness

Europe,
North America,
China
etc.

Turkey, India, Vietnam, Thailand, Indonesia, Mexico, Brazil, etc

Europe
Expand operations through the strengthening of the sales
network for mainstay businesses and sales promotion aimed
at exploring new markets
North America
Expand operations by taking steps aimed at enhancing
business competitiveness, such as reinforcing manufacturing
systems
China
Expand operations in step with growth in infrastructure and
environment-related markets and market trends in FA systems

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Meetings are hosted every two years in each of the
four regions outside Japan, and Mr. Sakuyama,
President and CEO of Mitsubishi Electric, joined the
meetings held this year in Asia-Pacific and the
Americas.

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Mitsubishi Electric athletes competed
outstandingly as Japans national team
members in the 17th Asian Games and
2014 Asian Para Games that took place
in Incheon, South Korea.

Medalists from Mitsubishi Electric

Synchronized
swimming

Yuichi Sugita

Tennis

Taekwondo

Kei Marumo

Three Bronze medals

Bronze medal

Yuma Yamada

Two Silver medals

Lihmeb`am
We received a report from Abhi Shekhar at Mitsubishi Electric India Private
Limited (MEI).

DELHI

GURGAON

INDIA

JAPAN