Mitsubishi Electric Corporation

It's time we'd like to now start the financial results briefing of Q1 of fiscal year ending March 2027 of Mitsubishi Electric. Let me introduce the speaker today. Executive Officer, CFO, Kenichiro Fujimoto. Mr. Fujimoto, please start. Thank you. This is Fujimoto of Mitsubishi Electric. Thank you very much for attending this financial results briefing. First of all, I'd like to express deepest condolences to the victims of 2026 Kumamoto earthquake and extend heartfelt sympathies to affected people. entire Mitsubishi Electric Group sincerely pray for swift recovery of affected areas and will start the initiative to support the people who are affected. In relation to the Kumamoto earthquake, let me share with you the current status of our business. We have two production sites in Kumamoto for semiconductor and device business. There were no significant impact on buildings. Processes that completed the equipment inspection and startup gradually resumed the operation since yesterday. Now, let me start my explanation on the fiscal 27 Q1 consolidated financial results. Please turn to page 4. Those are the key points of the financial results. Driven by the growing demand and others, Q1 revenue increased year-on-year in all segments, especially industry mobility and life segments. This was the record high Q1 revenue, ¥1,497.1 billion. in fa systems a defense and space system air conditioning system and home products the business scale increased and there were price improvements in mass production businesses and there was a weaker yen effect as i said all p grew 50.4 billion year-on-year to 144. 3 billion yen which was the record high as q1 as for four-year fiscal 27 forecast in factory automation system ai and semiconductor related demand increased leading to bigger business scale and yen weakened in q1 So the previous forecast is revised upward by 70 billion yen, revenue of 6.27 trillion and adjusted OP of 620 billion, up 30 billion from the initial forecast. Page 6, this is the results of the Q1. As explained, revenue was up 14% year-on-year, adjusted OP up 54%. The net profit attributable to MEC stockholders increased 21% year-on-year to 109.8 billion yen, the highest number as Q1. This shows the waterfall chart showing the Q1 revenue and adjusted P year-on-year changes. The weaker yen pushed up the revenue by 85 billion yen and pushed up the operating profit by 22 billion yen. Excluding the FX impact, there were procurement price increase revenue in FAA system, defense space system, AC system, and home products. increased and also there were price improvements in mass production businesses and there was an effect of the next day support program implemented last fiscal year the AOP increased by 28.5 billion yen this shows the consolidated statement of financial position and cash flow total assets declined by 109.2 billion yen from the end of last fiscal year inventories increased with the progress of construction in the introduction individual production businesses but there is a progress in collection of the account receivables total equity increased by 88.6 billion yen from the end of last fiscal year The MEC stockholders' equity was 4,575.5 bn up 87.2 bn from the end of last fiscal year, reflecting the dividend payment of 61.4 bn but the booking of 109.8 bn in net profit. and the percentage of this against the total asset increased to 63.1% plus 2.2 points. Next is the free cash flow. There were increase in the expenses of the inventories, but with the higher net profit and also the return of the retirement benefit trust assets, the free cash flow, excuse me, the cash flow from operating activities, was inflow of 388.6 billion yen, up 195.1 billion yen. There was an increase in the tangible fixed assets, and as a result, the cash flow from investing activities increased 67.7 billion yen year-on-year. And free cash flow was positive 301.5 billion yen, up 127.4 billion yen year-on-year. Next is year-on-year comparison of revenue and operating profit by segment. Revenue increased in all segments.

AOP increased in all segments except for digital innovation.

I will explain the details on the following pages by segment. And sub-segment-wise numbers will be shown in supplementary materials on page 20.

Please turn to page 10. I'll start with infrastructure segment. Demand continued to be robust across all businesses, and for the whole segment, orders revenue and adjusted operating profit were up year over year. In public utility systems, while orders was up year over year thanks to large orders for UPS systems in North America, revenue fell due to a decline in the domestic transport business. Adjusted operating profit was also down year-over-year due to changes in a project portfolio and absence of one of factors which was present in the prior year. In energy systems, orders was up year-over-year driven primarily by the domestic power generation business. Both revenue and adjusted operating profit were up year-over-year thanks to the growth of a substation business in North America, among others. In defence and space systems, while orders was down year over year, last year we had large projects in the defence systems business, revenue rose by 37% year over year, thanks to increased production capacity and adjusted operating profit was also up year over year. Please turn to page 11 for industry and mobility segment. In FA systems, driven by increased demand for AI and semiconductor related products in China, Japan, Taiwan and elsewhere, orders rose by 42% and revenue grew by 30% year over year. Adjusted operating profit was also up year over year, driven by higher revenue and price improvements, despite factors such as rising procurement costs. In automotive equipment, despite a decline in car multimedia in North America, both revenue and adjusted operating profit were up year over year, driven by weaker yen and price improvements. Please turn to page 12. for life segment. In building systems, orders, revenue and just the operating profit were up year over year, driven by the weaker yen and the consolidation of an affiliate in the Middle East as a subsidiary. In air conditioning and systems and home products, despite decline in North America, revenue was up year over year due to the weaker yen and solid demand for air conditioning equipment in Europe, as well as in Japan. Adjusted operating profit was up year-over-year, driven by the weaker yen, increased revenue due to higher demand and price improvements despite a rise in procurement costs. Please turn to page 13. In digital innovation, demand remained firm, driven by system upgrades and digital transformation, resulting in higher orders and revenue year-over-year, while adjusted operating profit stayed flat. In semiconductor and device, demand stayed robust for products such as optical devices for data center communications. Orders was up 53% year-over-year for the whole segment due to growth in telecom optical devices and the power semiconductors for industrial as well as commercial use, consumer use. Both revenue and adjusted operating profit were up year-over-year, driven by stronger demand and weaker yen. Please turn to page 14. Revenue by customer location. Revenue increased year over year in both domestic and overseas markets. Domestic revenue grew led by defense and space systems, and the number was up 9% year over year. Overseas revenue rose by 18% a year over year, driven by growth in China and Asia, primarily in FAA systems, and in Europe, in air conditioning systems and home products business. The overseas ratio increased by 2 percentage points to 57%. Please turn to page 16. Full year forecast for fiscal 27 has been revised from the previous announcement to project higher revenue and profit to revenue of 6.27 trillion yen and adjusted operating profit of 620 billion yen. FX assumptions from Q2 onwards remain unchanged at 150 yen to the US dollar, 175 yen to the euro and 21.5 yen to the Chinese yuan. Revenue and adjusted operating profit by segment for the current forecast are disclosed in the supplement on page 21. The forecast has been revised upwards for both revenue and profit to reflect higher growth in demand for AI and semiconductors in the FA systems segment in China and Japan, as well as higher revenue in energy systems in North America and weaker yen in Q1 compared to our assumption. The impact of the earthquake in Kumamoto Prefecture on our business performance is expected to be limited.