Mitsubishi Heavy Industries, Ltd.

Hello, good afternoon. My name is Kozawa. Allow me to summarize the Quarters 1, 2, 3 financial results using the presentation materials. Some materials have been released in advance. I will give you the overview of the financial results according to the table of contents shown on slide 2. Please refer to slide 4. The slide shows the results for several financial indicators. Slide 5 summarizes the highlights. Order intake, revenue, and profit all increased year over year. The increase in order intake was particularly large with the order intake results through quarter 3. 4,501,000,000 yen attained the same level as the full year FY2022. Regarding full-year forecasts, while we raised the order intake forecast by 1 trillion yen at the time of our first staff finance results release, due to continued depreciation of the yen and progress in nuclear power in other businesses, which exceeded our projections, we further increased the forecast by 400 billion yen to 6 trillion yen. Regarding revenue, all segments increased year over year, although the effect of the difference in foreign exchange rates versus FY22 was around 100 billion yen, even when excluding this revenue increased. Based on progress through quarter three, we raised the revenue forecast in the plants and infrastructure systems and logistics, thermal and drive system segments by 50 billion each, 100 billion yen in total, arriving at a company-wide full-year total of 4,400,000,000 yen. Both business profit and net income showed large year-over-year increases, as will be shown in the slide later in the presentation. The benefit from price optimization efforts with us continues since FY 2022. The effect of revenue increases similarly to the first half of this fiscal year. That's how the value of free cash flow was netted at 400 billion yen, which is 200 billion yen lower than by 2022. That said, we are planning for large cash inflows in quarter four, so this progress is mostly in line with the full year plan. Slide six and a few slides beyond that provide a little more detail on our financial results. Slide seven. Includes information already provided, so I will forego the explanation. Slide 8 shows the balance sheet and cash flows. Total assets increased from the end of FY2022 by 543.3 billion yen to 6,018.1 billion yen. To provide a breakdown of this increase, the impact of currency translation ethics related to foreign currency denominated assets caused by further depreciation of the yen was around 130 billion yen, and the impact of increase in stock prices of our shareholders was around 50 billion yen. Moreover, trade receivables and inventories increased, but we believe that these accounts are trending within the range of our normal fluctuations for MHI. The main cause of the increase in fixed assets and other non-current assets was acquisition and Regarding cash flows, operating cash flows significantly decreased year-over-year. One reason for this is that we are both expanding our top line while entering a phase of working through advances received due to changes in our product mix. We are therefore continuing to carefully manage accounts, particularly trade receivables and inventories. Regarding investing cash flow, although there was income from the sale of securities and other activities, a decrease in inflows from asset sales and an increase in growth in investments, including the acquisition of concentrics, caused outflows to significantly increase year-over-year. Slide 9 shows factors contributing to year-over-year changes in business profit. The leftmost bar shows business profit in quarters 1 to 3, FY22, which was 105.2 billion yen. To the right of this is changes in one-time expenses, which is the difference between one-time expenses booked in each fiscal year. In FY2022, in addition to organizational transformation expenses related to our European thermal power operations, we booked one-time losses from several international projects. During FI 2023, in addition to the one-time losses associated with the aero engines program, which were incurred in the first half, we booked claim expenses for some international projects as well as a write-down for an international investment. Regarding price optimization, cost increases contracted year-over-year in forklifts and HVAC. While the benefits of price optimization, that is price increases, exceeded this, resulting in an increase of 30 billion yen. For the first quarter, it was 14 billion yen. Second quarter was 10 billion yen. And the third quarter was 6 billion yen. So due to these other factors shown here, the business profit in quarters 1 to 3 was 191.6 billion yen in terms of the impact was diminishing quarter over quarter.

Slide 10 shows a summary of order intake, revenue and business profit by segment. Over the next few slides, I will explain the situation in each segment. Slide 11 shows the status of the energy system segment. Order intake, revenue, and profit all increased year over year. Particularly of note, based on good performance in GTCC, which continued since fiscal 22, as well as favorable progress in the segment overall, including nuclear power, we have raised our full-year order intake forecast by 200 billion yen. Slide 12 shows this region in the plants and infrastructure systems. In this segment, although order intake decreased year over year, revenue and profit both increased. As indicated in this table, main cause of the decrease in order intake was metals machinery. That said, considering that the current level of orders is stronger than original forecast, we have raised the full year guidance by 50 billion yen to 750 billion yen. Based on the progress through quarter three, we have also raised the guidance for revenue by 50 billion yen to 750 billion yen. Slide 13 shows the status of the logistics, thermal, and drive system. Order intake, revenue, and profit all increased year over year. Based on the progress in logistics systems thus far, as well as continued depreciation of the yen, we have increased the full year forecast for order intake and revenue by 50 billion yen to 1.3 trillion yen. Slide 14 shows the situation in the aircraft, defense, and space segment. Particularly, the order intake was mainly from plan project in the defense area. Based on the progress thus far, as well as plans going forward, we have increased the original full-year forecast of 1.8 trillion yen by 100 billion yen to a total of 1.9 trillion yen. Regarding profit, due to an increase of 787 deliveries to Boeing as well as benefits from the weak yen in the commercial aviation IOS structure business, and based on the progress through the quarter three, we have increased the full year forecast by 10 billion yen to 60 billion yen. Slide 15 through 18 shows the fiscal 23 earnings forecast. A summary of the revisions made this time is shown on slide 16. I will forego an explanation as these slides outline information I have already shared. This concludes my presentation on our financial results, but allow me to maintain one more point regarding the stock split. Our stock price is currently around 10,000 yen, which means that one unit of 100 shares costs around 1 million yen. I'm sure that you're aware that the Tokyo Stock Exchange has issued a request to lower share unit trading price with a specific guideline of 500,000 yen. And based on this guideline, we have decided to do it for one stock split.