Mitsubishi Heavy Industries, Ltd.

Good afternoon. Allow me to summarize the first quarter results using the presentation materials. So the materials are organized according to the content shown on slide two. First, I will provide an overview of the financial results. Please refer to slide four. This slide shows the results in several financial indicators. Slide five summarizes the highlights. This quarter was generally in line with their plan. Order intake, revenue, and profit all increased year over year. Order intake has increased significantly from the first quarter of FY2022 to the first quarter of FY2023, but order intake exceeded even these levels in this first quarter of this fiscal year. Although defense order intake, which was the main cause of increased orders in Q1 of FY2023, declined, orders in the energy system segment led by GTCC grew significantly. Progress versus the full-year forecast was around 32%, a relatively strong start. Both business profit and net income increased year over year. Notably, business profit increased by 61%, as I will explain later on slide 9. Order intake, revenue, and profit all achieved record highs for the first quarter. Slide 6 provides a little more detail on the financial results. Slide 7 includes information already provided, so I will go in explanation. Slide 8 shows the balance sheet and cash flows. Total assets increased by 401.7 billion yen from the end of FY2023 to 6,658,000,000 yen. Approximately 140 billion yen of this increase was due to currency translation effects related to foreign currency denominated assets due to depreciation of the yen. Excluding this, cash and cash equivalents were slightly less than 140 billion yen, and inventories were approximately 100 billion yen. It is normal for inventories to increase in the first quarter, and we believe this is within the range of normal fluctuations, taking into account the fact that our revenue is growing. Regarding cash flows, although investing cash flows increased significantly due to expenditures related to the acquisition of an office building in Tokyo, free cash flow improved by 14.1 billion yen year-over-year due to, in part, to an improvement in operating cash flow arising from higher profit results. Slide 9 shows factors which cause year-over-year changes in business profit. On the left bar, in the first quarter of FY2023, business profit was 51.9 billion yen. Although there were negative factors in Q1 of FY24, such as declining gains in asset sales and personal cost inflation, these were mostly offset by the benefit of the weak yen. Increase revenue in each business segment in addition to improvements to product mixes and profitability is served to increase profit to 83.5 billion yen in the first quarter of FY2024.

Slide 10 shows a summary of order intake, revenue, and business profit per segment. I will not explain a lot about each segment. Due to the establishment of green transformation solutions in April of this year, We have made some adjustments to our reporting segment. Please note that the figures for the Q1 FY2023 financial results are shown here retroactively adjusted to reflect these changes. Slide 11 shows the situation in the energy system segment. Order intake, revenues, and business profit increased year over year, showing a good start in terms of progress versus the four-year forecast. In particular, order intake in GTCC has been strong since last year. In steam power, revenue decreased in line with expectations due to the fading out of new installations in coal-fired thermal power, but business profit increased due to a city pipeline of service work. Slide 12 shows the situation in the plant and infrastructure system segment. In this segment, order intake, revenues, and business profit all increased year over year, showing a good start in terms of the progress process. The signing of a contract for a waste-free energy system for Yokohama City contributed to orders in the environmental system business, which sits within the others category. Slide 13 shows the situation in the logistics, thermal, and the drive system segment, or LT&D. Order intake and revenue increased slightly year over year, but revenue excluding the impact of the weak yen actually decreased. Business profit decreased in turbochargers due to production disruptions caused by issues at some of the suppliers. Revenue in HVAC decreased due to a drop in revenue in Europe. Slide 14 shows the situation in the aircraft, defense, and the space segment. Order intake decreased year over year due to the several large defense orders booked in Q1FA23. However, defense order intake was still at a high level compared to the previous year, and this in a steady progress versus the full air forecast. In terms of revenue, there was steady progress in execution of a large backlog. Business profit increased significantly due to the effect of the weekend in addition to the effect of higher revenue. Slide 15 to 17 shows the FY2024 earnings forecast. Since there's been no change from May's announcement, I will omit a detailed explanation. Overall, there were no major surprises in the first quarter, and I believe that we had a steady and strong start in terms of progress versus the four-year plan. Although the financial market has been volatile over the last few days, aside from the intrinsic nature of fluctuations, the actual values are still within the range of assumptions made at the beginning of the fiscal year. We will continue to steadily implement the various initiatives to achieve the four-year targets. That concludes my presentation. Thank you very much.