1st Quarter Results

Mitsubishi Electric Announces Consolidated Financial Resultsfor the First Quarter of Fiscal 2018

TOKYO, July 31, 2017 - Mitsubishi Electric Corporation (TOKYO: 6503) announced today its consolidated financial results for the first quarter, ended June 30, 2017, of the current fiscal year ending March 31, 2018 (fiscal 2018).

Consolidated Financial Results

The global economy in the first quarter (from April through June 2017) of fiscal 2018 saw a continuing recovery trend in China, a buoyant expansion in the U.S. and gradual trends of recovery in Japan and Europe. In addition, the yen weakened against the U.S. dollar and the euro in and after May compared to the same period of the previous fiscal year.

Under these circumstances, consolidated net sales in the first quarter increased by 8% compared to the same period of the previous fiscal year to 1,005.5 billion yen with increased sales in all segments. Consolidated operating income increased by 24% compared to the same period of the previous fiscal year to 74.2 billion yen, due primarily to increased profits in the Energy and Electric Systems, Industrial Automation Systems and Electronic Devices segments.

Consolidated Financial Results by Business Segment

Energy and Electric Systems

The social infrastructure systems business saw increases in both orders and sales from the same period of the previous fiscal year due primarily to increases in the transportation systems business and the power systems business in Japan.

The building systems business remained substantially unchanged in orders, while sales increased compared to the same period of the previous fiscal year due primarily to growth in the renewal business in Japan and the new installation of elevators and escalators outside Japan.

As a result, total sales for this segment increased by 5% from the same period of the previous fiscal year. Operating income increased by 2.8 billion yen from the same period of the previous fiscal year due primarily to an increase in sales.

Industrial Automation Systems

The factory automation systems business saw increases in both orders and sales from the same period of the previous fiscal year due primarily to growth in capital expenditures in the fields of organic light emitting diodes (OLED) mainly in Korea, smartphones and electric cars in China as well as buoyancy in exports by machinery manufacturers in Japan.

The automotive equipment business saw increases in both orders and sales from the same period of the previous fiscal year due primarily to buoyancy in the car sales markets in Europe as well as Japanese car manufacturers experiencing increases in sales volume in China.

As a result, total sales for this segment increased by 16% from the same period of the previous fiscal year. Operating income increased by 17.4 billion yen from the same period of the previous fiscal year due primarily to an increase in sales.

Information and Communication Systems

The telecommunications systems business saw decreases in both orders and sales compared to the same period of the previous fiscal year due primarily to decreased demand in communications infrastructure equipment.

The information systems and service business saw an increase in sales compared to the same period of the previous fiscal year, mainly owing to an increase in the system integrations business.

The electronic systems business saw a decrease in orders compared to the same period of the previous fiscal year due to a decrease in large-scale projects in the space systems business, while sales experienced an increase compared to the same period of the previous fiscal year due primarily to progress with large-scale projects in the defense systems business.

As a result, total sales for this segment increased by 9% compared to the same period of the previous fiscal year. Operating income improved by 0.9 billion yen from the same period of the previous fiscal year due primarily to an increase in sales and improvements in profitability.

Electronic Devices

The electronic devices business saw an increase in orders, while sales rose by 23% from the same period of the previous fiscal year due to an increase in demand mainly for power modules used in industrial and consumer applications as well as the resolution of negative influences caused by the 2016 Kumamoto earthquakes in the previous fiscal year.

Operating income increased by 2.0 billion yen compared to the same period of the previous fiscal year due primarily to an increase in sales.

Home Appliances

The home appliances business saw an increase in sales of 3% from the same period of the previous fiscal year due to an increase in sales of air conditioners for Europe, China and Japan.

Operating income decreased by 7.6 billion yen compared to the same period of the previous fiscal year due primarily to increases in material prices and sales expenses.

Others

Sales increased by 9% compared to the same period of the previous fiscal year due primarily to an increase in sales at affiliated companies involved in materials procurement.

Operating income decreased by 0.5 billion yen compared to the same period of the previous fiscal year due primarily to a shift in project portfolio.

Financial Standing

An analysis on the status of assets, liabilities and equity on a consolidated basis

Total assets as of the end of this fiscal quarter decreased from the end of the previous fiscal year by 54.8 billion yen to 4,117.3 billion yen. The change in balance of total assets is mainly attributable to increases in the balances of cash and cash equivalents by 50.4 billion yen, and of inventories by 80.3 billion yen as a result of work-in-process as recorded in commensurate with progress in job orders under pertinent contracts, while trade receivables decreased by 168.2 billion yen primarily as a result of credit collection.

Total liabilities decreased from the end of the previous fiscal year by 79.6 billion yen to 1,951.9 billion yen. The outstanding balances of debts and corporate bonds decreased by 0.2 billion yen from the end of the previous fiscal year to 351.8 billion yen, resulting in a rise in the ratio of interest bearing debt to total assets to 8.5%, representing a 0.1 point increase compared to the end of the previous fiscal year. Trade payables decreased by 56.6 billion yen, and retirement and severance benefits decreased by 7.2 billion yen due primarily to an increase in pension assets resulting from a rise in stock prices and other factors.

Mitsubishi Electric Corporation shareholders' equity increased by 23.6 billion yen compared to the end of the previous fiscal year to 2,063.2 billion yen. The shareholders' equity ratio was recorded at 50.1%, representing a 1.2 point increase compared to the end of the previous fiscal year. These changes referred to above primarily result from recording a net income attributable to Mitsubishi Electric Corporation of 67.7 billion yen, despite decreases in dividend payment of 38.6 billion yen as well as in accumulated other comprehensive income by 4.7 billion yen caused by such factors as a decrease in unrealized losses from sale of securities.

An analysis on the status of cash flow on a consolidated basis

Cash flows from operating activities for this quarter increased by 4.3 billion yen compared to the same period of the previous fiscal year to 113.5 billion yen (cash in). Cash flows from investing activities decreased by 0.4 billion yen compared to the same period of the previous fiscal year to 22.2 billion yen (cash out). As a result, free cash flow was 91.3 billion yen (cash in). Cash flows from financing activities were 43.8 billion yen (cash out) mainly due to dividend payments.

Forecast for Fiscal 2018

As a result of the company's revised terms of foreign currency rates in which it sees the yen weaker mainly against the euro in and after the second quarter of fiscal 2018, as well as growth expected in the Industrial Automation Systems segment in which it sees an increase in demand for capital expenditures mainly in Asia, the company's consolidated earnings forecast for the first half of fiscal 2018, ending September 30, 2017, and for fiscal 2018, ending March 31, 2018, have been revised from the announcement on April 28, 2017 as stated below.

Other income increased by 10.0 billion yen due primarily to a higher than expected gain in sales of investment securities in Renesas Electronics Corporation.

First Half of Fiscal 2018 Consolidated Earnings Forecast

Fiscal 2018 Consolidated Earnings Forecast

Exchange rates in and after the second quarter of fiscal 2018 is unchanged from the previous announcement at 105 yen to the U.S. dollar, while exchange rates to the euro have been revised to 120 yen, ten yen weaker than the previous rate.

Consolidated Financial Results Summary

 (In billions of yen except where noted)

Notes:

1) Consolidated financial charts are made in accordance with U.S. GAAP.

2) The Company has 213 consolidated subsidiaries.

Consolidated Profit and Loss Statement

(In millions of yen)

Consolidated Comprehensive Income Statement

(In millions of yen)

Consolidated Balance Sheet

(In millions of yen)

Consolidated Cash Flow Statement

 (In millions of yen)

Consolidated Segment Information

1. Sales and Operating Income by Business Segment

(In millions of yen)

*Notes: Inter-segment sales are included in the above chart.

2. Sales and Operating Income by Location

(In millions of yen)

*Notes: Inter-segment sales are included in the above chart.

3. Sales by Location of Customers

(In millions of yen)

Cautionary Statement

The Mitsubishi Electric Group (hereafter "the Group") is involved in development, manufacture and sales in a wide range of fields including Energy and Electric Systems, Industrial Automation Systems, Information and Communication Systems, Electronic Devices and Home Appliances, and these operations extend globally, not only inside Japan, but also in North America, Europe, Asia and other regions. While the statements herein are based on certain assumptions and premises that the Group trusts and considers to be reasonable under the circumstances on the date of announcement, actual financial standings and operating results are subject to change due to any of the factors as contemplated hereunder and/or any additional factor unforeseeable as of the date of this announcement. Such factors materially affecting the expectations expressed herein shall include but are not limited to the following:

(1) Important trends

The Group's operations may be affected by trends in the global economy, social conditions, laws, tax codes and regulations.

(2) Foreign currency exchange rates

Fluctuations in foreign currency markets may affect the Group's sales of exported products and purchases of imported materials that are denominated in U.S. dollars or euros, as well as its Asian production bases' sales of exported products and purchases of imported materials that are denominated in foreign currencies.

(3) Stock markets

A fall in stock market prices may cause the Group to record devaluation losses on marketable securities, or cause an increase in retirement benefit obligations in accordance with a decline in the fair value of pension assets.

(4) Supply/demand balance for products and procurement conditions for materials and components

A decline in prices and shipments due to changes in the supply/demand balance, as well as an increase in material prices due to a worsening of material and component procurement conditions, may adversely affect the Group's performance.

(5) Fund raising

An increase in interest rates, the yen interest rate in particular, would increase the Group's interest expenses.

(6) Significant patent matters

Important patent filings, licensing, copyrights and patent-related disputes may adversely affect related businesses.

(7) Environmental legislation or relevant issues

The Group may incur losses or expenses owing to changes in environmental legislation or the occurrence of environmental issues. Such changes in legislation or the occurrence of environmental issues may also impact manufacturing and all corporate activities of the Group.

(8) Flaws or defects in products or services

The Group may incur losses or expenses resulting out of flaws or defects in products or services, and the lowered reputation of the quality of all its products and services may affect the entire Group.

(9) Litigation and other legal proceedings

The Group's operations may be affected by lawsuits or other legal proceedings against Mitsubishi Electric, its subsidiaries and/or equity-method affiliated companies.

(10) Disruptive changes

Disruptive changes in technology, development of products using new technology, timing of production and market introduction may adversely affect the Group's performance.

(11) Business restructuring

The Group may record losses due to restructuring measures.

(12) Information security

The performance of the Group may be affected by computer virus infections, unauthorized access and other unpredictable incidents that lead to the loss or leakage of personal information held by the Group or confidential information regarding the Group's business such as its technology, sales and other operations.

(13) Natural disasters

The Group's operations, particularly manufacturing activities, may be affected by the occurrence of earthquakes, typhoons, tsunami, fires and other large-scale disasters.

(14) Other significant factors

The Group's operations may be affected by the outbreak of social or political upheaval due to terrorism, war, pandemic by new strains of influenza and other diseases, or other factors.

Notes

1. Change in the accounting policy

On April 1, 2017, the Company adopted Accounting Standards Update 2015-17 "Balance Sheet Classification of Deferred Taxes" issued by the Financial Accounting Standards Board. To reflect this adoption, all deferred tax assets and liabilities have been classified as noncurrent in the consolidated balance sheets and subsequently, deferred tax assets and liabilities in the same tax-paying component or tax jurisdiction were offset. The consolidated balance sheet as of March 31, 2017 has been reclassified to reflect this adoption and accordingly, deferred tax assets previously included in 'Prepaid expenses and other current assets' and deferred tax liabilities previously included in 'Other liabilities' have been reclassified as 'Other assets'.

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About Mitsubishi Electric Corporation

With over 90 years of experience in providing reliable, high-quality products, Mitsubishi Electric Corporation (TOKYO: 6503) is a recognized world leader in the manufacture, marketing and sales of electrical and electronic equipment used in information processing and communications, space development and satellite communications, consumer electronics, industrial technology, energy, transportation and building equipment. Embracing the spirit of its corporate statement, Changes for the Better, and its environmental statement, Eco Changes, Mitsubishi Electric endeavors to be a global, leading green company, enriching society with technology. The company recorded consolidated group sales of 4,238.6 billion yen (US$ 37.8 billion*) in the fiscal year ended March 31, 2017. For more information visit:

www.MitsubishiElectric.com

*At an exchange rate of 112 yen to the US dollar, the rate given by the Tokyo Foreign Exchange Market on March 31, 2017