Mitsubishi Electric Reports 2000 Financial Results
18 May 2000
Mitsubishi Electric Reports 2000 Financial Results; April 1, 1999 - March 31, 2000
TOKYO--May 18, 2000--Mitsubishi Electric Corporation (OTC:MSBHY) today announced its financial results for the fiscal year ended March 31, 2000 as follows:Consolidated: Net sales 3.7742 trillion yen (1% decrease from last year) Operating income 79.2 billion yen Income before income taxes 40.2 billion yen Net income 24.8 billion yen Non-consolidated: Net sales 2.7050 trillion yen (2% decrease from last year) Operating income 82.6 billion yen (134% increase from last year) Ordinary profit 32.1 billion yen (542% increase from last year) Net income 12.2 billion yen
In fiscal 2000, Japan's economy continued in a severe state due to factors including decreasing personal consumption and home investment caused by uneasiness about future employment and income prospects. However, there was a retreat from instability in financial systems, and policies concerning the relaxing of financial regulations and the expansion of public works projects began to take effect. In the latter half of the year in particular, due to vigorous demand abroad and improved business results along with an end to the trend of decreased capital expenditure, prospects were brighter compared with the previous year. Furthermore, there was expansion in the world economy: the US continued its high growth mainly due to domestic demand, the foundation for recovery became clearer in Europe and the East Asian economy made a rapid recovery.
As the economy continued to become more borderless, the electronics industry and its related industries both domestically and abroad faced rapid industry restructuring, competition continued to intensify and the management environment became increasingly severe.
Under these circumstances, a midterm plan of management objectives was set targeting the fiscal year 2001, which marks Mitsubishi Electric's 80th anniversary. To reach the objectives, the whole Mitsubishi Electric group made earnest efforts to strengthen its competitiveness and improve its financial status.
Cash Flow
Cash flow (income) obtained through sales activities amounted to 392.7 billion yen (an income increase of 222.0 billion yen compared to the previous year), cash flow (spending) in investment activities came to 167.8 billion yen (a spending increase of 9.6 billion compared to the previous fiscal year) while free cash flow amounted to an income of 224.9 billion yen (an improvement over the previous year's 212.3 billion yen).
As a result, the balance of debt, factoring in foreign currency translation adjustments of overseas subsidiaries, was reduced by 258.4 billion yen.
Consolidated Sales Results by Business Segment
In the Heavy Machinery group, compared to the previous year, sales decreased 10% to 820.9 billion yen and operating profits declined 39% to 30.6 billion yen. The power electric equipment business met lower orders and sales compared to last year's level due to restrained facility investment by domestic power companies and a decrease in large-scale projects in the overseas market. This holds true in the electric equipment production business for manufacturers as well, who faced sluggish facility investment by domestic manufacturers and decreased large business orders overseas. The transportation business marked increased sales and orders received. Although the business suffered due to investment restriction by domestic railway companies, it also received large orders from abroad. The public infrastructure business secured a high level in orders received and sales as in the previous year, owing to steady public investment. The buildings equipment business decreased both in orders received and sales because of a decreased demand for elevators and escalators both in the domestic and overseas market. As to the net results, sales for the whole of this segment were lower compared with last year. Operating profit showed a sharp decrease in the entire segment because of decreased profits from the power and buildings equipment businesses.
In the Industrial Products and Automation Equipment group, on a year-on-year basis, sales increased 2% to 620.1 billion yen while operating profits declined 32% to 27.1 billion yen. In the industrial products business, both orders received and sales of factory automation equipment, such as programmable controllers and servo motors, increased on a year-on-year basis due to the recovery of domestic demand triggered by the expansion of IT-related investment and an increase in demand in overseas markets, mainly in Asia. Orders received and sales of power distribution control equipment, however, leveled off from the previous year, due to the sluggish demand for domestic buildings and its related businesses. Sales of industrial automation operations decreased on a year-on-year basis resulting from stagnating domestic demand caused by investment restructuring in the automobile-related plant and equipment industry, considered one of Mitsubishi Electric's major businesses in this field, as well as the drop in demand in overseas markets. Orders received, however, remained at last year's level due to the increase in IT-related machine tools in the latter half of the fiscal year. Sales of automobile-related equipment grew on a year-on-year basis, due to the increase in sales of information equipment for automobiles and car electronics equipment and increased sales in the overseas market backed by continued economic growth in the United States. As a result, sales for the entire sector increased on a year-on-year basis. Overall operating income for this sector dropped significantly, which was attributable to the sharp decline both in industrial products and industrial automation equipment business.
In the Information, Telecommunications and Electronic Systems & Devices group, from a year earlier sales increased 7% to 1.5861 trillion yen and profitability was attained with operating profits at 12.8 billion yen. Products including SRAM and flash memory packages, system LSI, high frequency and optical devices, in which Mitsubishi Electric is leading the industry, increased sales both at home and abroad. LCD businesses marked a significant increase both in sales and orders received on a year-on-year basis, due to the stable demand for note-type PCs and LCD monitors, mainly 15 inch models. As for telecommunications businesses, both sales and orders received showed significant record growth from the previous year, due to the accelerating growth of the Internet and the healthy expansion of the mobile telephone market. Demand for submarine cable systems equipment, mobile phones and base stations for mobile phones grew greatly. Both orders received and sales of computer operations dropped on a year-on-year basis, due to the slow recovery on investment in plant and equipment mainly in the manufacturing industry and declining demand caused by Y2K problems. Space operations saw a huge increase in orders received due to large lot orders, including the communication satellite "OPTUS C-1," a first for Japan to get an order abroad for a commercial satellite, and Super Bird 5, in addition to favorable business factors in satellite components. As for defense operations, orders received increased from the previous year due to a slight increase in the government procurement budget. Alternatively, both space and defense operations marked a decline in sales, due to a gap between large-lot orders. As a result, the entire sector recorded improvement in sales on a year-on-year basis. Overall operating income for this entire sector increased for the first time in four years, due to profits of all operations improving, especially exemplified with the semiconductor business turning to profitability once again.
In the Consumer and Other Products group, compared to the previous year, sales declined 4% to 975.3 billion yen and the segment went into the black with operating profits at 8.5 billion yen. Although sales of oil fan heaters, air quality amenity equipment like humidifiers and dehumidifiers and color TVs increased on a year-on-year basis, those of air conditioners and refrigerators decreased. As a result, consumer products and audio-visual operations decreased sales on a year-on-year basis. Regarding air conditioning equipment operations for business use, sales dropped from the previous year due to the sluggish investment in plants and equipment. Sales of housing equipment operations increased on a year-on-year basis, due to the growth of its major products including ventilation fans and new businesses like solar power generation systems and smoke ventilation systems. Sales in overseas markets improved from the previous year due mainly to the growth in air conditioning businesses in Europe. In addition, sales in materials procurement, welfare programs and distribution sectors were up on a year-on-year basis. In total, the entire sector saw slight declines in sales volume. Operating income moved into the black for the first time in four years due to the significant improvements in the profitability of audio-visual operations resulting from extensive restructuring.
Dividend Policy
In the period under review, the midterm dividend was 2.5 yen and a year-end dividend of 2.5 yen is planned, making for a total 5 yen dividend per share payment for the year. (In the previous year, the midterm dividend was 0 yen, and the year-end dividend was 3 yen for a total 3 yen per share dividend).
Forecasts for Next Fiscal Year
Although it is expected that the management environment facing the company will not lend itself to optimism, Mitsubishi Electric will actively expand its telecommunications business beginning with the mobile phone business with its increasing business opportunities and system LSI and flash memory, the axis of the semiconductor business, in order to meet the IT revolution. Furthermore, competitiveness will be strengthened for IT applications in core businesses such as heavy machinery, industrial products, automation equipment and home electronics.
Regarding accounting for retirement benefit plans, the company's pension accounting has been done according to US generally accepted accounting procedures (GAAP) in consolidated financial result statements. Japanese accounting standards for pension plans similar to the US GAAP will be newly applied to non-consolidated financial result statements beginning in the fiscal year 2001. Mitsubishi Electric plans to contribute certain marketable equity securities as an employee retirement benefit trust in the first half of fiscal 2001.
Forecasts for the next fiscal year are as follows:
Consolidated: Net sales 3.9 trillion yen (3% increase from last year) Operating income 100 billion yen (26% increase from last year) Income before income taxes 115 billion yen (186% increase from last year) Net income 75 billion yen (202% increase from last year) Non-consolidated: Net sales 2.8 trillion yen (4% increase from last year) Operating income 85 billion yen (3% increase from last year) Ordinary profit 60 billion yen (87% increase from last year) Net income 5 billion yen (59% decrease from last year)
Reference
Main management objectives as announced in the Mid-term Corporate Strategy (announced in October 1999) were as follows (on a consolidated basis):
Net Sales 4 trillion yen or more Income before Income Taxes 120 billion yen or more Return on Equity 10% or more
Management Policy
Fundamental Management Policy
Currently the world is facing drastic changes in social and economic circumstances as we move through the 21st Century, as seen in the progress of advanced IT infrastructure, the globalization of international markets and the increased emergence of energy and environmental issues. Mitsubishi Electric is determined to meet the requirements of this new era by further enhancing its corporate value in order to satisfy the expectations of vested interests of shareholders, customers, and employees.
The Mitsubishi Electric Group, as a whole, is eyeing sales and profit expansion through the consolidation of its competitive edge, specifically through fully utilizing Information Technology. The group, at the same time, will optimize management resources including capital and personnel in order to enhance the company's strengths and facilitate the foundation of consolidated management.
Basic Policy on Profit Sharing
Mitsubishi Electric's basic policy on profit sharing is to maintain stable dividends over the long term. Dividends will be decided after placing all factors into consideration: facility investment for business expansion, allocation and securing of in-house capital on such projects as R&D, and business performance during the term concerned and thereafter.
Business Strategy based on IT
The company previously announced its midterm management program in October 1999. The program, targeted at fiscal 2001, is currently under way almost exactly as planned. Among its measures, business strategy putting IT at the core is the key towards its achievement. IT will be the key for the consolidation of business competitiveness, which will be realized by utilizing intelligence and knowledge, and for planning advancement in network business, adding to the buildup of competitiveness through manufacturing efficiency. We plan to expand IT businesses and strengthen and expand other businesses through applying and introducing IT to each operation.
Specifically, management resources will be positively invested in strategic businesses. Thus, IT solution businesses in communication, information, and satellite areas will be expanded, which will be supported by enhanced business strength in system LSI and high frequency optical devices. At the same time, core businesses such as heavy machinery and industrial products and automation equipment will accelerate marketing of products and systems fully equipped with IT. Profitability will be increased by further consolidating competitive businesses, as sales expansion will be realized by global business development. This will enable the buildup of the business structure of the whole group.
The home appliance business will pursue a unified operation policy under the perspective of operating as a "living environment and digital media" business actively meeting the demand for home networks and digital AV equipment. The company will invest resources from the Group into the internet business, a greatly dynamic field. Internet businesses will be operated based on a structure that enables the mobilizing of the entire Group's power. As a result, the company plans to rapidly expand its Internet Service Provider business, Application Service Provider business, and Contents Provider business as a result.
Protection of Global Environment
In order to meet the social trend moving relentlessly towards a recycling society, Mitsubishi Electric will formulate its "Third Environmental Plan." This plan, to start from this fiscal year for three years, will be incorporated with a continued aggressive, voluntary behavior goal for the entire group aimed at reduction of environmental impact. In addition to promotion of the Design for Environment (DFE), which the company has been so far advocating, "Green Procurement" will also be facilitated in order to reduce environmental impact especially in the area of material purchasing.
CONSOLIDATED AND NON-CONSOLIDATED FINANCIAL RESULTS
1. CONSOLIDATED FINANCIAL RESULTS
(in billions of yen)
Fiscal 2000 Fiscal 1999 '00/'99(%)
Net sales 3,774.2 3,794.0 99
Income (loss) before income
taxes 40.2 (113.7) --
Net income (loss) 24.8 (44.5) --
Net income (loss) per share
(in yen) 11.57 (20.75)
Fiscal 2000: April 1, 1999 - March 31, 2000
2. NON-CONSOLIDATED FINANCIAL RESULTS
(in billions of yen)
Fiscal 2000 Fiscal 1999 '00/'99 (%)
Net sales 2,705.0 2,770.7 98
Ordinary profit 32.1 5.0 642
Net income (loss) 12.2 (92.5) --
Dividend per share
Annual dividend 5.0 yen 3.0 yen
Interim dividend 2.5 yen --
Term-end 2.5 yen 3.0 yen
biannual dividend
Net income (loss) per share 5.7 yen (43.1 yen)
(in yen)
Fiscal 2000: April 1, 1999 - March 31, 2000
CONSOLIDATED PROFIT AND LOSS STATEMENT
(in millions of yen)
Fiscal 2000 % of total Fiscal 1999 % of
(A) (B) total
Net sales 3,774,230 100 3,794,063 100.0
Cost of sales 2,823,741 74.8 2,914,938 76.8
Selling, general and
Administrative expenses 871,225 23.1 891,561 23.5
Operating income 79,264 2.1 (12,436) --
Non-operating income 61,653 1.6 112,454 2.9
Interest and 18,299 0.5 24,346 0.6
dividends
Other income 43,354 1.1 88,108 2.3
Non-operating expenses 100,653 2.6 213,794 5.6
Interest and discount
charges 35,055 0.9 49,861 1.3
Other 65,598 1.7 163,933 4.3
Income (loss) before
income taxes 40,264 1.1 (113,776) --
Income tax 20,289 0.5 (58,089) --
Equity in earnings
(losses) of
affiliated companies 4,858 0.1 11,139 0.3
Net income (loss) 24,833 0.7 (44,548) --
CONSOLIDATED PROFIT AND LOSS STATEMENT
(in millions of yen)
(A) - (B) (A)/(B)
(%)
Net sales (19,833) 99
Cost of sales (91,197) 97
Selling, general and
Administrative expense (20,336) 98
Operating income 91,700 --
Non-operating income (50,801) 55
Interest and (6,047) 75
dividends
Other income (44,754) 49
Non-operating expenses (113,141) 47
Interest and discount
charges (14,806) 70
Other (98,335) 40
Income (loss) before
income taxes 154,040 --
Income tax 78,378 --
Equity in earnings
(losses) of
affiliated companies (6,281) 44
Net income (loss) 69,381 --
Fiscal 2000: April 1, 1999 - March 31, 2000
CONSOLIDATED BALANCE SHEETS
(in millions of yen)
Fiscal 2000(A) Fiscal 1999(B) (A) - (B)
(Assets) 2,206,743 2,306,436 (99,693)
Current assets
Cash and cash equivalents 326,329 367,983 (41,654)
Short-term investments 123,507 103,120 20,387
Trade receivables 945,334 990,067 (44,733)
Inventories 579,023 609,459 (30,436)
Prepaid expenses and
other current assets 232,550 235,807 (3,257)
Long-term receivables 18,833 34,834 (16,001)
Investments 442,663 459,048 (16,385)
Net property, plant
and equipment 868,795 907,389 (38,594)
Other assets 368,941 481,020 (112,079)
Total assets 3,905,975 4,188,727 (282,752)
(Liabilities and
shareholders' equity) 1,835,502 1,925,833 (90,331)
Current liabilities
Current portion of
short-term debt 607,769 751,245 (143,476)
Trade payables 777,810 734,234 43,576
Other current liabilities 449,923 440,354 9,569
Long-term debt 826,023 941,046 (115,023)
Employee retirement and
serverance benefits 598,241 732,602 (134,361)
Other fixed liabilities 14,311 14,515 (204)
Minority interests 35,448 34,119 1,329
Shareholders' equity 596,450 540,612 55,838
Capital 175,820 175,813 7
Capital surplus 210,643 210,637 6
Retained earnings 332,106 319,082 13,024
Accumulated other
comprehensive income
(loss) (122,119) (164,920) 42,801
Total liabilities and
stockholders' equity 3,905,975 4,188,727 (282,752)
Balance of debt 1,433,792 1,692,291 (258,499)
Other comprehensive income
Foreign currency
translation
adjustments (21,225) (13,817) (7,408)
Minimum pension
liability adjustments (100,894) (151,103) 50,209
Fiscal 2000: April 1, 1999 - March 31, 2000
CONSOLIDATED CASH FLOW
(in millions of yen)
Fiscal 2000(A) Fiscal 1999(B) (A) - (B)
Cash flows from
operating activities
1 Net income (loss) 24,833 (44,548) 69,381
2 Adjustments to
reconcile net income
(loss) to net cash
provided by operating
activities
(1) Depreciation 215,969 230,600 (14,631)
(2) Deferred income
taxes (13,882) (87,768) 73,886
(3) Increase in trade
receivables 42,304 (54,133) 96,437
(4) Increase in
inventories 2,444 99,622 (97,178)
(5) Increase in
prepaid expenses and
other assets 1,707 31,876 (30,169)
(6) Increase
(decrease) in trade
payables 56,405 (50,879) 107,284
(7) Increase
(decrease) in other
liabilities 61,551 33,770 27,781
(8) Other, net 1,467 12,197 (10,730)
Net cash provided by
operating activities 392,798 170,737 222,061
Cash flows from
investing activities
1 Capital expenditure (190,289) (261,178) 70,889
2 Proceeds from sale of
property, plant and
equipment 14,366 24,701 (10,335)
3 Purchase of short-
term investments and
investment securities (65,407) (143,419) 78,012
4 Proceeds from sale
of short-term
investments and
investment securities 69,379 222,274 (152,895)
5 Other, net 4,076 (555) 4,631
Net cash used in
investing activities (167,875) (158,177) (9,698)
Cash flows from
financing activities
1 Proceeds from long-
term debt 79,846 283,357 (203,511)
2 Repayment of long-
term debt (100,762) (228,790) 128,028
3 Increase (decrease)
in bank loans, net (220,800) (110,032) (110,768)
4 Dividends paid (11,809) -- (11,809)
Net cash provided by
(used in) financing
activities (253,525) (55,465) (198,060)
Effect of exchange
rate changes on cash
and cash equivalents (13,052) (10,686) (2,366)
Net increase
(decrease) in cash
and cash equivalents (41,654) (53,591) 11,937
Cash and cash
equivalents at
beginning of year 367,983 421,574 (53,591)
Cash and cash
equivalents at the
end of year 326,329 367,983 (41,654)
Free cash flow 224,923 12,560 212,363
Fiscal 2000: April 1, 1999 - March 31, 2000
CONSOLIDATED SEGMENT INFORMATION - 1
1. Sales by Product Segment
(in billions of yen)
Fiscal 2000
Product Segment Sales (A) % of total Operating
profit (loss)
Heavy Machinery 820.9 21 30.6
Industrial Products and
Automation Equipment 620.1 15 27.1
Information,
Telecommunication and
Electronic Systems
and Devices 1,586.1 40 12.8
Consumer and Other
Products 975.3 24 8.5
Sub Total 4,002.5 100 79.2
Intersegment Sales (228.3) -- --
Total Net Sales 3,774.2 -- 79.2
1. Sales by Product Segment
(in billions of yen)
Fiscal 1999 (A)/(B)(%)
Sales (B) % of total Operating
profit
(loss)
Product Segment
Heavy Machinery 912.7 23 50.1 90
Industrial Products and
Automation Equipment 608.8 15 39.9 102
Information,
Telecommunication and
Electronic Systems
and Devices 1,482.3 37 (98.1) 107
Consumer and Other
Products 1,019.1 25 (4.4) 96
Sub Total 4,023.1 100 (12.4) 99
Intersegment Sales (229.1) -- -- --
Total Net Sales 3,794.0 -- (12.4) 99
Fiscal 2000: April 1, 1999 - March 31, 2000
2. Sales by location segment
(in billions of yen)
Fiscal 2000 Fiscal 1999
Sales (A) Operating Sales (B) Operating A/B (%)
profit profit
(loss) (loss)
Japan 3,423.0 70.2 3,429.7 18.0 100
North America 323.3 (2.7) 339.3 (23.2) 95
Asia (except Japan) 299.5 8.0 316.4 12.5 95
Europe 252.8 (2.8) 279.1 (20.7) 91
Others 20.2 (0.1) 20.1 (0.1) 100
Total 4,319.1 72.6 4,384.7 (13.5) 99
Intersegment Sales (544.9) 6.5 (590.7) 1.1 --
Total Net Sales 3,774.2 79.2 3,794.0 (12.4) 99
Fiscal 2000: April 1, 1999 - March 31, 2000
CONSOLIDATED SEGMENT INFORMATION - 2
3. Overseas Sales
(in billions of yen)
Fiscal 2000 Fiscal 1999
Sales (A) % of total Sales (B) % of total
net sales net sales A/B (%)
North America 342.7 9 359.4 10 95
Asia (except Japan) 320.5 8 368.9 10 87
Europe 230.6 6 240.5 6 96
Others 60.4 2 75.8 2 80
Total overseas sales 954.3 25 1,044.7 28 91
Fiscal 2000: April 1, 1999 - March 31, 2000