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3rd Quarter Results

4 Feb 2019 07:00

RNS Number : 9495O
Mitsubishi Electric Corporation
04 February 2019
 

 

 

 

FOR IMMEDIATE RELEASE

No. 3248

 

Investor Relations Inquiries

Media Inquiries

Investor Relations Group, Corporate Finance Division

Public Relations Division

Mitsubishi Electric Corporation

Mitsubishi Electric Corporation

Cad.Irg@rk.MitsubishiElectric.co.jp

prd.gnews@nk.MitsubishiElectric.co.jp

www.MitsubishiElectric.com/news/

 

Mitsubishi Electric Announces Consolidated Financial Resultsfor the First 9 Months and Third Quarter of Fiscal 2019

 

 

TOKYO, February 4, 2019 - Mitsubishi Electric Corporation (TOKYO: 6503) announced today its consolidated financial results for the first 9 months and third quarter, ended December 31, 2018, of the current fiscal year ending March 31, 2019 (fiscal 2019).

 

 

1. Consolidated First 9 Months Results (April 1, 2018 - December 31, 2018)

Net sales:

3,264.1

billion yen

(2% increase from the same period last year)

Operating income:

201.4

billion yen

(15% decrease from the same period last year)

Income before income taxes:

221.7

billion yen

(14% decrease from the same period last year)

Net income attributable to Mitsubishi Electric Corp. stockholders:

158.8

billion yen

(14% decrease from the same period last year)

 

In the first 9 months of fiscal 2019, from April through December 2018, the global economy saw a buoyant expansion in the U.S. and gradual trends of recovery in Japan and Europe, while the Chinese economy experienced a slight slowdown. In addition, compared to the same period of the previous fiscal year, the yen appreciated against the U.S. dollar, especially due to the currency fluctuation at the end of December, and remained strong against the euro in and after August.

Under these circumstances, consolidated net sales for the first 9 months of fiscal 2019 increased by 2% compared to the same period of the previous fiscal year to 3,264.1 billion yen due primarily to increased sales in the Energy and Electric Systems, Industrial Automation Systems and Home Appliances segments.

Consolidated operating income decreased by 15% compared to the same period of the previous fiscal year to 201.4 billion yen, due to decreased profits in the Industrial Automation Systems, Information and Communication Systems and Electronic Devices segments.

Income before income taxes decreased by 14% compared to the same period of the previous fiscal year to 221.7 billion yen.

Net income attributable to Mitsubishi Electric Corporation stockholders decreased by 14% compared to the same period of the previous fiscal year to 158.8 billion yen.

 

 

Consolidated Financial Results by Business Segment (First 9 months, Fiscal 2019)

Energy and Electric Systems

Total sales:

885.8

billion yen

(3% increase from the same period last year which recorded 859.6 billion yen)

Operating income:

39.2

billion yen

(11.1 billion yen increase from the same period last year which recorded 28.1 billion yen)

The social infrastructure systems business saw an increase in orders from the same period of the previous fiscal year due primarily to an increase in orders of the transportation systems business inside and outside Japan. Total sales for this business also increased from the same period of the previous fiscal year, due to increased sales in the power systems business in Japan and the transportation systems business worldwide.

The building systems business remained substantially unchanged in both orders and sales from the same period of the previous fiscal year, experiencing a decrease in the new installation of elevators and escalators in Japan and China and buoyant growth in the renewal business in Japan and other factors.

As a result, total sales for this segment increased by 3% from the same period of the previous fiscal year to 885.8 billion yen. Operating income increased by 11.1 billion yen from the same period of the previous fiscal year to 39.2 billion yen, due primarily to an increase in sales.

 

 

 

Industrial Automation Systems

Total sales:

1,094.2

billion yen

(2% increase from the same period last year which recorded 1,070.5 billion yen)

Operating income:

114.0

billion yen

(35.3 billion yen decrease from the same period last year which recorded 149.4 billion yen)

 

The factory automation systems business saw decreases in both orders and sales from the same period of the previous fiscal year due primarily to a decrease in capital expenditures in the fields of organic light emitting diodes (OLED) and smartphones outside Japan, despite buoyant demand 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 increases in Japan, other markets in Asia and Europe, as well as increased sales in electric-vehicle related equipment in response to market growth worldwide.

As a result, total sales for this segment increased by 2% from the same period of the previous fiscal year to 1,094.2 billion yen. Operating income decreased by 35.3 billion yen from the same period of the previous fiscal year to 114.0 billion yen due primarily to a shift in product mix, increases in material prices and upfront investment for growth drivers.

 

 

 

Information and Communication Systems

Total sales:

287.5

billion yen

(2% decrease from the same period last year which recorded 292.2 billion yen)

Operating income:

6.6

billion yen

(0.2 billion yen decrease from the same period last year which recorded 6.9 billion yen)

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

The information systems and service business saw a decrease in orders from the same period of the previous fiscal year and sales remained substantially unchanged, experiencing a shift in projects for the IT infrastructure services business, etc.

The electronic systems business saw a decrease in orders from the same period of the previous fiscal year and sales remained substantially unchanged, experiencing a shift in the portfolio of large-scale projects in the space systems business, etc.

As a result, total sales for this segment decreased by 2% from the same period of the previous fiscal year to 287.5 billion yen. Operating income decreased by 0.2 billion yen from the same period of the previous fiscal year to 6.6 billion yen due primarily to a decrease in sales.

 

Electronic Devices

Total sales:

148.5

billion yen

(1% decrease from the same period last year which recorded 149.8 billion yen)

Operating income:

0.7

billion yen

(11.2 billion yen decrease from the same period last year which recorded 12.0 billion yen)

 

The electronic devices business saw a decrease in orders and sales fell by 1% from the same period of the previous fiscal year to 148.5 billion yen mainly due to decreased demand for optical communication devices.

Operating income decreased by 11.2 billion yen from the same period of the previous fiscal year to 0.7 billion yen due primarily to a decrease in sales and a shift in product mix.

 

 

Home Appliances

Total sales:

806.0

billion yen

(3% increase from the same period last year which recorded 779.1 billion yen)

Operating income:

50.7

billion yen

(0.3 billion yen increase from the same period last year which recorded 50.3 billion yen)

 

The home appliances business saw an increase in sales of 3% from the same period of the previous fiscal year to 806.0 billion yen due to an increase in sales of air conditioners for Japan, Europe and North America.

Operating income increased by 0.3 billion yen from the same period of the previous fiscal year to 50.7 billion yen due primarily to an increase in sales, despite rises in material prices and sales expenses.

 

 

Others

Total sales:

500.2

billion yen

(5% increase from the same period last year which recorded 477.4 billion yen)

Operating income:

16.1

billion yen

(0.9 billion yen increase from the same period last year which recorded 15.2 billion yen)

 

Sales increased by 5% from the same period of the previous fiscal year to 500.2 billion yen mainly due to an increase in sales at affiliated companies involved in logistics.

Operating income increased by 0.9 billion yen from the same period of the previous fiscal year to 16.1 billion yen due primarily to an increase in sales.

 

 

 

 

2. Consolidated Third-quarter Results (October 1, 2018 - December 31, 2018)

Net sales:

1,094.0

billion yen

(2% increase from the same period last year)

Operating income:

75.5

billion yen

(11% decrease from the same period last year)

Income before income taxes:

80.4

billion yen

(13% decrease from the same period last year)

Net income attributable to Mitsubishi Electric Corp. stockholders:

56.4

billion yen

(10% decrease from the same period last year)

 

Consolidated net sales for this quarter, from October through December 2018, was 1,094.0 billion yen, a 2% increase from the same period of the previous fiscal year, due to increased sales in the Energy and Electric Systems and Home Appliances segments.

Consolidated operating income was 75.5 billion yen, an 11% decrease from the same period of the previous fiscal year, with decreased profits mainly in the Industrial Automation Systems and Electronic Devices segments.

Income before income taxes decreased by 13% compared to the same period of the previous fiscal year to 80.4 billion yen.

Net income attributable to Mitsubishi Electric Corporation stockholders decreased by 10% compared to the same period of the previous fiscal year to 56.4 billion yen.

 

 

 

Consolidated Financial Results by Business Segment (Third Quarter, Fiscal 2019)

Energy and Electric Systems

Total sales:

317.2

billion yen

(5% increase from the same period last year which recorded 302.4 billion yen)

Operating income:

23.6

billion yen

(6.1 billion yen increase from the same period last year which recorded 17.5 billion yen)

 

The social infrastructure systems business saw an increase in orders from the same period of the previous fiscal year due primarily to increases in the transportation systems business in Japan and the power systems business outside Japan. Total sales also increased from the same period of the previous fiscal year, due to increases in the power systems and transportation systems businesses in Japan.

Orders in the building systems business remained substantially unchanged, while sales for this business increased from the same period of the previous fiscal year due primarily to buoyant growth in the renewal business in Japan.

As a result, total sales for this segment increased by 5% from the same period of the previous fiscal year to 317.2 billion yen. Operating income increased by 6.1 billion yen from the same period of the previous fiscal year to 23.6 billion yen mainly due to an increase in sales.

 

 

Industrial Automation Systems

Total sales:

363.9

billion yen

(1% decrease from the same period last year which recorded 366.8 billion yen)

Operating income:

36.1

billion yen

(17.0 billion yen decrease from the same period last year which recorded 53.1 billion yen)

 

The factory automation systems business saw decreases in both orders and sales from the same period of the previous fiscal year due primarily to a decrease in capital expenditures in the fields of organic light emitting diodes (OLED) and smartphones outside Japan, despite buoyant demand 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 an increase in the Japanese market, as well as increased sales in electric-vehicle related equipment in response to market growth worldwide.

As a result, total sales for this segment decreased by 1% from the same period of the previous fiscal year to 363.9 billion yen. Operating income decreased by 17.0 billion yen from the same period of the previous fiscal year to 36.1 billion yen due primarily to a decrease in sales, a shift in product mix and upfront investment for growth drivers.

 

 

Information and Communication Systems

Total sales:

100.7

billion yen

(Substantially unchanged from the same period last year which recorded 101.0 billion yen)

Operating income:

4.1

billion yen

(0.4 billion yen increase from the same period last year which recorded 3.6 billion yen)

 

The telecommunications systems business saw an increase in orders from the same period of the previous fiscal year, while sales decreased from the same period of the previous fiscal year mainly due to a decrease in sales of communications infrastructure equipment.

The information systems and service business saw increases in both orders and sales from the same period of the previous fiscal year, mainly due to an increase in the system integrations business.

The electronic systems business saw decreases in both orders and sales from the same period of the previous fiscal year mainly due to a decrease in large-scale projects in the defense systems business.

As a result, total sales for this segment remained substantially unchanged from the same period of the previous fiscal year to 100.7 billion yen. Operating income increased by 0.4 billion yen from the same period of the previous fiscal year to 4.1 billion yen due primarily to a shift in project portfolios.

 

 

 

Electronic Devices

Total sales:

46.6

billion yen

(7% decrease from the same period last year which recorded 50.3 billion yen)

Operating income (loss):

(0.5

billion yen)

(5.3 billion yen decline from the same period last year which recorded 4.7 billion yen)

 

The electronic devices business saw a decrease in orders and sales fell by 7% from the same period of the previous fiscal year to 46.6 billion yen mainly due to decreased demand for optical communication devices and power modules used in industrial applications.

Operating income declined by 5.3 billion yen from the same period of the previous fiscal year to a loss of 0.5 billion yen due primarily to a decrease in sales and a shift in product mix.

 

 

Home Appliances

Total sales:

248.9

billion yen

(4% increase from the same period last year which recorded 239.9 billion yen)

Operating income:

17.0

billion yen

(6.1 billion yen increase from the same period last year which recorded 10.9 billion yen)

 

The home appliances business saw an increase in sales of 4% from the same period of the previous fiscal year to 248.9 billion yen due to an increase in sales of air conditioners for Japan, North America and Europe.

Operating income increased by 6.1 billion yen from the same period of the previous fiscal year to 17.0 billion yen due primarily to an increase in sales.

 

 

Others

Total sales:

172.4

billion yen

(3% increase from the same period last year which recorded 166.6 billion yen)

Operating income:

5.8

billion yen

(0.2 billion yen increase from the same period last year which recorded 5.5 billion yen)

 

Sales increased by 3% from the same period of the previous fiscal year to 172.4 billion yen mainly due to an increase in sales at affiliated companies involved in logistics.

Operating income increased by 0.2 billion yen from the same period of the previous fiscal year to 5.8 billion yen due primarily to an increase in sales.

 

 

 

 

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 162.5 billion yen to 4,143.0 billion yen. The change in balance of total assets is mainly attributable to increases in inventories by 129.2 billion yen, while cash and cash equivalents decreased by 155.7 billion yen, and trade receivables and contract assets decreased by 108.7 billion yen.

Total liabilities decreased from the end of the previous fiscal year by 184.5 billion yen to 1,723.8 billion yen. The outstanding balances of debt decreased by 19.2 billion yen from the end of the previous fiscal year to 292.6 billion yen, resulting in a decline in the ratio of interest bearing debt to total assets to 7.1%, representing a 0.1 point decrease compared to the end of the previous fiscal year. Meanwhile, trade payables decreased by 56.3 billion yen, and other current liabilities decreased by 112.3 billion yen.

Mitsubishi Electric Corporation stockholders' equity increased by 16.3 billion yen compared to the end of the previous fiscal year to 2,310.5 billion yen. The stockholders' equity ratio was recorded at 55.8%, representing a 2.5 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 stockholders of 158.8 billion yen, despite a decrease due to dividend payment of 85.8 billion yen and a decrease in other comprehensive income of 55.8 billion yen reflecting a fall in stock prices and the stronger yen.

 

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

Cash flows from operating activities decreased by 24.2 billion yen compared to the same period of the previous fiscal year to 110.1 billion yen (cash in), mainly due to an increase in inventories. Cash flows from investing activities increased by 29.5 billion yen compared to the same period of the previous fiscal year to 151.5 billion yen (cash out), due primarily to a decrease in proceeds from sale of short-term investments and investment securities. As a result, free cash flow was 41.3 billion yen (cash out). Cash flows from financing activities were 111.8 billion yen (cash out) mainly due to dividend payments.

 

 

Forecast for Fiscal 2019 (year ending March 31, 2019)

Considering the financial results for the third quarter of fiscal 2019, lower demand in the Industrial Automation Systems and Electronic Devices segments in the Chinese market and other factors, Mitsubishi Electric's business performance for fiscal 2019 is expected to fall below the company's previous forecast. As a result, the company's consolidated earnings forecast for fiscal 2019, ending March 31, 2019, has been revised from the announcement on October 29, 2018 as stated below.

 

Consolidated Earnings Forecast for Fiscal 2019

Consolidated

Previous forecast (announced Oct. 29)

Current forecast

Net sales:

4,510.0 billion yen

4,500.0 billion yen

(1% increase from fiscal 2018)

Operating income:

305.0 billion yen

285.0 billion yen

(13% decrease from fiscal 2018)

Income before income taxes:

335.0 billion yen

310.0 billion yen

(12% decrease from fiscal 2018)

Net income attributable to

Mitsubishi Electric Corp. stockholders:

240.0 billion yen

225.0 billion yen

(12% decrease from fiscal 2018)

Exchange rates in the fourth quarter of fiscal 2019 is unchanged from the previous announcement, which are 105 yen to the U.S. dollar, 125 yen to the euro and 16.0 yen to the Chinese yuan.

 

Note: The results forecast above is based on assumptions deemed reasonable by the company at the present time, and actual results may differ significantly from forecasts. Please refer to the cautionary statement at the end.

 

 

Consolidated Financial Results Summary

 

1. Consolidated First 9 Months Results

 (In billions of yen except where noted)

FY '18 9 months (A)(Apr. 1, 2017 - Dec. 31, 2017)

FY '19 9 months (B)(Apr. 1, 2018 - Dec. 31, 2018)

B - A

B/A (%)

Net sales

3,186.7

3,264.1

77.3

102

Operating income

237.9

201.4

(36.5)

85

Income before income taxes

259.1

221.7

(37.4)

86

Net income attributable to Mitsubishi Electric Corp. stockholders

184.0

158.8

(25.2)

86

Basic net income per share attributable to Mitsubishi Electric Corp. stockholders

85.78 yen

74.03 yen

(11.75 yen)

86

 

 

2. Consolidated Third-quarter Results

(In billions of yen except where noted)

FY '18 Q3 (A)(Oct. 1, 2017 -Dec. 31, 2017)

FY '19 Q3 (B)(Oct. 1, 2018 - Dec. 31, 2018)

B - A

B/A

(%)

Net sales

1,074.9

1,094.0

19.0

102

Operating income

85.1

75.5

(9.6)

89

Income before income taxes

93.0

80.4

(12.5)

87

Net income attributable to Mitsubishi Electric Corp. stockholders

63.0

56.4

(6.6)

90

Basic net income per share attributable to Mitsubishi Electric Corp. stockholders

29.41 yen

26.34 yen

(3.07 yen)

90

Notes:

1) Consolidated financial statements are made in accordance with International Financial Reporting Standards (IFRS).

2) The company has 207 consolidated subsidiaries.

 

Condensed Quarterly Consolidated Financial Statements

Condensed Quarterly Consolidated Statements of Profit or Loss and Condensed Quarterly Consolidated Statements of Comprehensive Income (First 9 Months, Fiscal 2019)

 

(Condensed Quarterly Consolidated Statements of Profit or Loss)

(In millions of yen)

FY '18 9 months

(Apr. 1, 2017 -

Dec. 31, 2017)

FY '19 9 months

(Apr. 1, 2018 -

Dec. 31, 2018)

(A)

% of total

(B)

% of total

B - A

B/A

(%)

Net sales

3,186,755

100.0

3,264,125

100.0

77,370

102

Cost of sales

2,207,353

69.3

2,300,249

70.5

92,896

104

Selling, general and

administrative expenses

742,195

23.2

763,053

23.3

20,858

103

Other profit (loss)

739

0.0

617

0.0

(122)

83

Operating income

237,946

7.5

201,440

6.2

(36,506)

85

Financial income

7,546

0.2

8,460

0.2

914

112

Financial expenses

2,044

0.1

3,347

0.1

1,303

164

Share of profit of investments accounted for using theequity method

15,726

0.5

15,193

0.5

(533)

97

Income before income taxes

259,174

8.1

221,746

6.8

(37,428)

86

Income tax expenses

66,565

2.1

54,354

1.7

(12,211)

82

Net income

192,609

6.0

167,392

5.1

(25,217)

87

Net income attributable to:

Mitsubishi Electric Corp.stockholders

184,070

5.8

158,819

4.9

(25,251)

86

Non-controlling interests

8,539

0.2

8,573

0.2

34

100

 

 

(Condensed Quarterly Consolidated Statements of Comprehensive Income)

(In millions of yen)

FY '18

9 months (A)

(Apr. 1, 2017 -Dec. 31, 2017)

FY '19

9 months (B)

(Apr. 1, 2018 - Dec. 31, 2018)

B - A

Net income

192,609

167,392

(25,217)

(Other comprehensive income (loss),net of tax)

Items that will not be reclassified tonet income

Financial assets measured at fair valuethrough other comprehensive income

23,345

(44,418)

(67,763)

Share of other comprehensive income of investments accounted for using the equity method

829

(464)

(1,293)

Subtotal

24,174

(44,882)

(69,056)

Items that may be reclassified to net income

Exchange differences on translating foreign operations

45,981

(13,215)

(59,196)

Net changes in the fair value of cash flow hedges

3

(36)

(39)

Share of other comprehensive income of investments accounted for using the equity method

1,080

(1,651)

(2,731)

Subtotal

47,064

(14,902)

(61,966)

Total other comprehensive income (loss)

71,238

(59,784)

(131,022)

Comprehensive income

263,847

107,608

(156,239)

Comprehensive income attributable to:

Mitsubishi Electric Corp. stockholders

251,574

100,261

(151,313)

Non-controlling interests

12,273

7,347

(4,926)

Condensed Quarterly Consolidated Statements of Profit or Loss and Condensed Quarterly Consolidated Statements of Comprehensive Income (Third Quarter, Fiscal 2019)

 

(Condensed Quarterly Consolidated Statements of Profit or Loss)

(In millions of yen)

FY '18 Q3

(Oct. 1, 2017 -

Dec. 31, 2017)

FY '19 Q3

(Oct. 1, 2018 -

Dec. 31, 2018)

(A)

% of total

(B)

% of total

B - A

B/A

(%)

Net sales

1,074,988

100.0

1,094,019

100.0

19,031

102

Cost of sales

744,794

69.3

770,080

70.4

25,286

103

Selling, general and

administrative expenses

246,182

22.8

248,688

22.7

2,506

101

Other profit (loss)

1,109

0.0

249

0.0

(860)

22

Operating income

85,121

7.9

75,500

6.9

(9,621)

89

Financial income

2,747

0.3

2,778

0.3

31

101

Financial expenses

605

0.1

3,009

0.3

2,404

497

Share of profit of investments accounted for using theequity method

5,739

0.6

5,186

0.5

(553)

90

Income before income taxes

93,002

8.7

80,455

7.4

(12,547)

87

Income tax expenses

27,179

2.6

21,095

2.0

(6,084)

78

Net income

65,823

6.1

59,360

5.4

(6,463)

90

Net income attributable to:

Mitsubishi Electric Corp.stockholders

63,098

5.9

56,491

5.2

(6,607)

90

Non-controlling interests

2,725

0.2

2,869

0.2

144

105

 

 

(Condensed Quarterly Consolidated Statements of Comprehensive Income)

(In millions of yen)

FY '18 Q3 (A)

(Oct. 1, 2017 -

Dec. 31, 2017)

FY '19 Q3 (B)

(Oct. 1, 2018 -

Dec. 31, 2018)

B - A

Net income

65,823

59,360

(6,463)

(Other comprehensive income (loss),net of tax)

Items that will not be reclassified tonet income

Financial assets measured at fair valuethrough other comprehensive income

13,624

(35,989)

(49,613)

Share of other comprehensive income of investments accounted for using the equity method

232

(702)

(934)

Subtotal

13,856

(36,691)

(50,547)

Items that may be reclassified to net income

Exchange differences on translating foreign operations

14,422

(22,601)

(37,023)

Net changes in the fair value of cash flow hedges

(2)

(128)

(126)

Share of other comprehensive income of investments accounted for using the equity method

1,265

112

(1,153)

Subtotal

15,685

(22,617)

(38,302)

Total other comprehensive income (loss)

29,541

(59,308)

(88,849)

Comprehensive income

95,364

52

(95,312)

Comprehensive income attributable to:

Mitsubishi Electric Corp. stockholders

90,879

(673)

(91,552)

Non-controlling interests

4,485

725

(3,760)

 

 

Condensed Quarterly Consolidated Statements of Financial Position

(In millions of yen)

FY '18 (A)

(ended Mar. 31, 2018)

FY ' 19

9 months (B)

(ended Dec. 31, 2018)

B - A

(Assets)

Current assets

2,582,735

2,455,870

(126,865)

Cash and cash equivalents

599,199

443,485

(155,714)

Trade receivables and Contract Assets

1,191,529

1,082,734

(108,795)

Inventories

646,262

775,475

129,213

Other current assets

145,745

154,176

8,431

Non-current assets

1,722,845

1,687,175

(35,670)

Investments accounted for using the equity method

194,308

194,199

(109)

Other financial assets

363,171

301,608

(61,563)

Net property, plant and equipment

724,257

747,654

23,397

Other non-current assets

441,109

443,714

2,605

Total assets

4,305,580

4,143,045

(162,535)

(Liabilities)

Current liabilities

1,488,249

1,340,965

(147,284)

Bonds and borrowings

122,895

144,338

21,443

Trade payables

579,566

523,228

(56,338)

Other current liabilities

785,788

673,399

(112,389)

Non-current liabilities

420,112

382,863

(37,249)

Bonds and borrowings

189,055

148,342

(40,713)

Net defined benefit liabilities

171,520

178,020

6,500

Other non-current liabilities

59,537

56,501

(3,036)

Total liabilities

1,908,361

1,723,828

(184,533)

(Equity)

Mitsubishi Electric Corp. stockholders' equity

2,294,174

2,310,562

16,388

Common stock

175,820

175,820

Capital surplus

199,442

202,494

3,052

Retained earnings

1,811,348

1,881,564

70,216

Accumulated other comprehensive income (loss)

109,492

53,666

(55,826)

Treasury stock at cost

(1,928)

(2,982)

(1,054)

Non-controlling interests

103,045

108,655

5,610

Total equity

2,397,219

2,419,217

21,998

Total liabilities and equity

4,305,580

4,143,045

(162,535)

Balance of Debt

311,950

292,680

(19,270)

Accumulated other comprehensive income (loss):

Exchange differences on translating foreign operations

17,549

3,915

(13,634)

Remeasurements of defined benefit pension plans

Financial assets measured at fair value through other comprehensive income

91,952

49,811

(42,141)

Net changes in the fair value of cash flow hedges

(9)

(60)

(51)

 

Condensed Quarterly Consolidated Statements of Changes in Equity

(In millions of yen)

Mitsubishi Electric Corp. stockholders' equity

Non-controlling interests

Total equity

Common stock

Capital surplus

Retained earnings

Accumulated other comprehensive income (loss)

Treasury stock at cost

Total

Balance at April 1, 2017

175,820

198,745

1,593,660

101,166

(1,228)

2,068,163

98,800

2,166,963

Comprehensive income

Net income

184,070

184,070

8,539

192,609

Other comprehensive income (loss)

67,504

67,504

3,734

71,238

Comprehensive income

184,070

67,504

251,574

12,273

263,847

Transfer to retained earnings

7,941

(7,941)

Dividends paid

(68,696)

(68,696)

(5,791)

(74,487)

Purchase of treasury stock

(699)

(699)

(699)

Reissuance of treasury stock

0

0

0

0

Transactions with non-controlling interests, etc.

13

13

(311)

(298)

Balance at Dec. 31, 2017

175,820

198,758

1,716,975

160,729

(1,927)

2,250,355

104,971

2,355,326

Mitsubishi Electric Corp. stockholders' equity

Non-controlling interests

Total equity

Common stock

Capital surplus

Retained earnings

Accumulated other comprehensive income (loss)

Treasury stock at cost

Total

Balance at April 1, 2018

175,820

199,442

1,811,348

109,492

(1,928)

2,294,174

103,045

2,397,219

Comprehensive income

Net income

158,819

158,819

8,573

167,392

Other comprehensive income (loss)

(58,558)

(58,558)

(1,226)

(59,784)

Comprehensive income

158,819

(58,558)

100,261

7,347

107,608

Transfer to retained earnings

(2,732)

2,732

Dividends paid

(85,871)

(85,871)

(5,443)

(91,314)

Purchase of treasury stock

(1,054)

(1,054)

(1,054)

Reissuance of treasury stock

0

0

0

0

Transactions with non-controlling interests, etc.

3,052

3,052

3,706

6,758

Balance at Dec. 31, 2018

175,820

202,494

1,881,564

53,666

(2,982)

2,310,562

108,655

2,419,217

 

Condensed Quarterly Consolidated Statements of Cash Flows

(In millions of yen)

FY '18 9 months

(Apr. 1, 2017 - Dec. 31, 2017)

 (A)

FY '19 9 months

(Apr. 1, 2018 - Dec. 31, 2018)

(B)

B - A

I

Cash flows from operating activities

1

Net income

192,609

167,392

(25,217)

2

Adjustments to reconcile net income to net cash provided by operating activities

(1) Depreciation, amortization and other

127,685

126,739

(946)

(2) Decrease in trade receivables and contract assets

111,009

111,438

429

(3) Decrease (increase) in inventories

(114,945)

(128,291)

(13,346)

(4) Increase (decrease) in trade payables

(100,923)

(57,421)

43,502

(5) Other, net

(80,986)

(109,690)

(28,704)

Cash flows from operating activities

134,449

110,167

(24,282)

II

Cash flows from investing activities

1

Purchase of property, plant and equipment

(135,221)

(138,513)

(3,292)

2

Proceeds from sale of property, plant and equipment

2,204

3,689

1,485

3

Purchase of short-term investments and investment securities (net of cash acquired)

(6,701)

(10,315)

(3,614)

4

Proceeds from sale of short-term investments and investment securities (net of cash disposed)

29,729

4,747

(24,982)

5

Other, net

(11,956)

(11,139)

817

Cash flows from investing activities

(121,945)

(151,531)

(29,586)

I + II

Free cash flow

12,504

(41,364)

(53,868)

III

Cash flows from financing activities

1

Proceeds from long-term debt and repayment of long-term debt

(36,530)

(25,401)

11,129

2

Increase (decrease) in bank loans, net

(24,471)

(950)

23,521

3

Dividends paid

(68,696)

(85,871)

(17,175)

4

Purchase of treasury stock

(699)

(1,054)

(355)

5

Reissuance of treasury stock

0

0

0

6

Other, net

(7,419)

1,412

8,831

Cash flows from financing activities

(137,815)

(111,864)

25,951

IV

Effect of exchange rate changes on cash and cash equivalents

14,512

(2,486)

(16,998)

V

Net increase (decrease) in cash and cash equivalents

(110,799)

(155,714)

(44,915)

VI

Cash and cash equivalents at beginning of period

662,469

599,199

(63,270)

VII

Cash and cash equivalents at end of period

551,670

443,485

(108,185)

Consolidated Segment Information (First 9 Months, Fiscal 2019)

 

1. Sales and Operating Income by Business Segment

(In millions of yen)

Business Segment

FY '18 9 months

(Apr. 1, 2017 -

Dec. 31, 2017)

FY '19 9 months

(Apr. 1, 2018 -

Dec. 31, 2018)

C - A

D - B

C/A

(%)

Sales (A)

Operating income (B)

Sales(C)

Operating income (D)

Energy and Electric Systems

859,605

28,162

885,852

39,262

26,247

11,100

103

Industrial Automation Systems

1,070,518

149,474

1,094,255

114,096

23,737

(35,378)

102

Information and

Communication Systems

292,274

6,902

287,598

6,623

(4,676)

(279)

98

Electronic Devices

149,860

12,012

148,526

729

(1,334)

(11,283)

99

Home Appliances

779,163

50,370

806,071

50,711

26,908

341

103

Others

477,464

15,228

500,239

16,198

22,775

970

105

Subtotal

3,628,884

262,148

3,722,541

227,619

93,657

(34,529)

103

Eliminations and other

(442,129)

(24,202)

(458,416)

(26,179)

(16,287)

(1,977)

Consolidated Total

3,186,755

237,946

3,264,125

201,440

77,370

(36,506)

102

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

 

2. Sales by Location of Customers

(In millions of yen)

Location of Customers

FY '18 9 months

(Apr. 1, 2017 -

Dec. 31, 2017)

FY '19 9 months

(Apr. 1, 2018 -

Dec. 31, 2018)

B - A

B/A (%)

Sales (A)

% of total net sales

Sales (B)

% of total net sales

Japan

1,694,423

53.2

1,802,248

55.2

107,825

106

North America

308,438

9.7

313,960

9.6

5,522

102

Asia (excluding Japan)

816,232

25.6

761,257

23.3

(54,975)

93

China

412,889

13.0

373,921

11.5

(38,968)

91

Europe

319,113

10.0

339,744

10.4

20,631

106

Others

48,549

1.5

46,916

1.5

(1,633)

97

Total overseas sales

1,492,332

46.8

1,461,877

44.8

(30,455)

98

Consolidated total

3,186,755

100.0

3,264,125

100.0

77,370

102

 

 

Consolidated Segment Information (Third Quarter, Fiscal 2019)

 

1. Sales and Operating Income by Business Segment

(In millions of yen)

Business Segment

FY '18 Q3

(Oct. 1, 2017 -

Dec. 31, 2017)

FY '19 Q3

(Oct. 1, 2018 -

Dec. 31, 2018)

C - A

D - B

C/A

(%)

Sales (A)

Operating income (B)

Sales(C)

Operating income (loss) (D)

Energy and Electric Systems

302,471

17,502

317,210

23,698

14,739

6,196

105

Industrial Automation Systems

366,802

53,159

363,905

36,117

(2,897)

(17,042)

99

Information and

Communication Systems

101,058

3,652

100,731

4,121

(327)

469

100

Electronic Devices

50,328

4,778

46,630

(540)

(3,698)

(5,318)

93

Home Appliances

239,913

10,924

248,951

17,046

9,038

6,122

104

Others

166,683

5,568

172,408

5,855

5,725

287

103

Subtotal

1,227,255

95,583

1,249,835

86,297

22,580

(9,286)

102

Eliminations and other

(152,267)

(10,462)

(155,816)

(10,797)

(3,549)

(335)

Consolidated Total

1,074,988

85,121

1,094,019

75,500

19,031

(9,621)

102

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

 

2. Sales by Location of Customers

(In millions of yen)

Location of Customers

FY '18 Q3

(Oct. 1, 2017 -

Dec. 31, 2017)

FY '19 Q3

(Oct. 1, 2018 -

Dec. 31, 2018)

B - A

B/A (%)

Sales (A)

% of total net sales

Sales (B)

% of total net sales

Japan

583,919

54.3

633,446

57.9

49,527

108

North America

98,627

9.2

104,106

9.5

5,479

106

Asia (excluding Japan)

268,192

25.0

232,936

21.3

(35,256)

87

China

139,054

12.9

108,634

9.9

(30,420)

78

Europe

104,790

9.7

106,619

9.7

1,829

102

Others

19,460

1.8

16,912

1.6

(2,548)

87

Total overseas sales

491,069

45.7

460,573

42.1

(30,496)

94

Consolidated total

1,074,988

100.0

1,094,019

100.0

19,031

102

 

 

Notes to the Condensed Consolidated Financial Statements

(Notes regarding the going concern assumption)

Not applicable

(Notes if there is any significant change in Mitsubishi Electric Corp. stockholders' equity)

Not applicable

Disclosures of Transition to IFRS

The Mitsubishi Electric Group has applied IFRS beginning with the consolidated financial statements for the first quarter of the current fiscal year. The most recent consolidated financial statements prepared in accordance with US GAAP are for the one-year period ended on March 31, 2018. The date of transition to IFRS was April 1, 2017.

 

(1) Exemptions and exceptions in IFRS 1

IFRS 1 requires entities adopting IFRS for the first time to retrospectively apply IFRS in principle; however, with regard to certain items, it allows exemption from, or prohibits, retrospective application of IFRS.

The Company and its consolidated subsidiaries use the following exemptions on retrospective application permitted by IFRS 1:

 

- Business combinations

The Company and its consolidated subsidiaries elected not to apply IFRS 3 Business Combinations retrospectively to past business combinations that occurred on or before December 22, 2015. Consequently, the amount of goodwill that arose from business combinations occurred on or before December 22, 2015 is recorded at the carrying value in accordance with US GAAP. This goodwill was tested for impairment at the transition date irrespective of whether there was any indication of impairment.

 

- Exchange differences on translating foreign operations

The Company and its consolidated subsidiaries elected to deem the cumulative translation differences for foreign operations at the transition date to be zero. Consequently, the cumulative translation differences for foreign operations at the transition date were transferred from accumulated other comprehensive income (loss) to retained earnings.

 

- Designation of financial instruments recognized before the date of transition to IFRS

The Company and its consolidated subsidiaries elected to determine the classification of financial instruments on the basis of the facts and circumstances that exist at the date of transition to IFRS.

 

(2) Reconciliations

Reconciliations for which disclosures are required on first time adoption of IFRS are as follows:

Items that do not affect retained earnings and comprehensive income are presented in "Reclassification," and items that affect retained earnings and comprehensive income are presented in "Recognition and measurement differences."

 

Reconciliation of Equity as at the Date of Transition to IFRS (April 1, 2017)

(Consolidated Statements of Financial Position) (In millions of yen)

Presentation under US GAAP

US GAAP

Re-classification

Recognition and measurement differences

IFRS

Presentation under IFRS

(Assets)

(Assets)

Current assets

2,500,685

3,062

4,810

2,508,557

Current assets

Cash and cash equivalents

662,469

662,469

Cash and cash equivalents

Trade receivables

1,037,201

15,261

103,004

1,155,466

Trade receivables and contract assets

Inventories

643,040

(83,138)

559,902

Inventories

Prepaid expenses and other current assets

157,975

(12,199)

(15,056)

130,720

Other current assets

(3,062)

60,950

1,729,473

Non-current assets

Long-term trade receivables

2,815

(2,815)

Investments

618,935

(618,935)

181,724

5,634

187,358

Investments accounted for using the equity method

362,869

27,710

390,579

Other financial assets

Net property, plant and equipment

732,611

(33,133)

699,478

Net property, plant and equipment

Other assets

317,224

74,095

60,739

452,058

Other non-current assets

Total assets

4,172,270

65,760

4,238,030

Total assets

 

(In millions of yen)

Presentation under US GAAP

US GAAP

Re-classification

Recognition and measurement differences

IFRS

Presentation under IFRS

(Liabilities)

(Liabilities)

Current liabilities

1,525,761

7,456

33,082

1,566,299

Current liabilities

Bank loans and current portion of long-term debt

124,368

21,987

146,355

 

Bonds and borrowings

Trade payables

780,202

(145,119)

635,083

Trade payables

Other current liabilities

621,191

152,575

11,095

784,861

Other current liabilities

(7,456)

6,423

504,768

Non-current liabilities

Long-term debt

227,756

227,756

Bonds and borrowings

Retirement and severance benefits

194,990

8,044

203,034

Net defined benefit liabilities

Other fixed liabilities

83,055

(7,456)

(1,621)

73,978

Other non-current liabilities

Total liabilities

2,031,562

39,505

2,071,067

Total liabilities

(Equity)

(Equity)

Mitsubishi Electric Corp. shareholders' equity

2,039,627

28,536

2,068,163

Mitsubishi Electric Corp. stockholders' equity

Common stock

175,820

175,820

Common stock

Capital surplus

212,530

(13,785)

198,745

Capital surplus

Retained earnings

1,654,557

(60,897)

1,593,660

Retained earnings

Accumulated other comprehensive income (loss)

(2,052)

103,218

101,166

Accumulated other comprehensive income (loss)

Treasury stock at cost

(1,228)

(1,228)

Treasury stock at cost

Noncontrolling interests

101,081

(2,281)

98,800

Non-controlling interests

Total equity

2,140,708

26,255

2,166,963

Total equity

Total liabilities and equity

4,172,270

65,760

4,238,030

Total liabilities and equity

Balance of Debt

352,124

21,987

374,111

Balance of Debt

Accumulated other comprehensive income (loss):

Accumulated other comprehensive income (loss):

Foreign currency translation adjustments

18,535

(18,535)

Exchange differences on translating foreign operations

Pension liability adjustments

(156,993)

156,993

Remeasurements of defined benefit pension plans

Unrealized gains on securities

136,352

(35,223)

101,129

Financial assets measured at fair value through other comprehensive income

Unrealized gains on derivative instruments

54

(17)

37

Net changes in the fair value of cash flow hedges

 

 

Reconciliation of Equity as at the End of the Third Quarter of the Previous Fiscal Year(December 31, 2017)

(Condensed Quarterly Consolidated Statements of Financial Position) (In millions of yen)

Presentation under US GAAP

US GAAP

Re-classification

Recognition and measurement differences

IFRS

Presentation under IFRS

(Assets)

(Assets)

Current assets

2,490,034

1,017

(22,019)

2,469,032

Current assets

Cash and cash equivalents

551,670

551,670

Cash and cash equivalents

Trade receivables

902,389

16,168

142,456

1,061,013

Trade receivables and contract assets

Inventories

842,281

(149,865)

692,416

Inventories

Prepaid expenses and other current assets

193,694

(15,151)

(14,610)

163,933

Other current assets

(1,017)

45,536

1,738,485

Non-current assets

Long-term trade receivables

1,798

(1,798)

Investments

671,641

(671,641)

182,265

5,192

187,457

Investments accounted for using the equity method

372,218

27,666

399,884

Other financial assets

Net property, plant and equipment

757,869

(32,062)

725,807

Net property, plant and equipment

Other assets

262,658

117,939

44,740

425,337

Other non-current assets

Total assets

4,184,000

23,517

4,207,517

Total assets

 

(In millions of yen)

Presentation under US GAAP

US GAAP

Re-classification

Recognition and measurement differences

IFRS

Presentation under IFRS

(Liabilities)

(Liabilities)

Current liabilities

1,368,433

8,293

(1,075)

1,375,651

Current liabilities

Bank loans and current portion of long-term debt

110,782

514

111,296

Bonds and borrowings

Trade payables

652,998

(113,978)

539,020

Trade payables

Other current liabilities

604,653

122,271

(1,589)

725,335

Other current liabilities

(8,293)

30,163

476,540

Non-current liabilities

Long-term debt

207,935

207,935

Bonds and borrowings

Retirement and severance benefits

173,911

32,422

206,333

Net defined benefit liabilities

Other fixed liabilities

72,824

(8,293)

(2,259)

62,272

Other non-current liabilities

Total liabilities

1,823,103

29,088

1,852,191

Total liabilities

(Equity)

(Equity)

Mitsubishi Electric Corp. shareholders' equity

2,254,351

(3,996)

2,250,355

Mitsubishi Electric Corp. stockholders' equity

Common stock

175,820

175,820

Common stock

Capital surplus

212,543

(13,785)

198,758

Capital surplus

Retained earnings

1,778,978

(62,003)

1,716,975

Retained earnings

Accumulated other comprehensive income (loss)

88,937

71,792

160,729

Accumulated other comprehensive income (loss)

Treasury stock at cost

(1,927)

(1,927)

Treasury stock at cost

Noncontrolling interests

106,546

(1,575)

104,971

Non-controlling interests

Total equity

2,360,897

(5,571)

2,355,326

Total equity

Total liabilities and equity

4,184,000

23,517

4,207,517

Total liabilities and equity

Balance of Debt

318,717

514

319,231

Balance of Debt

Accumulated other comprehensive income (loss):

Accumulated other comprehensive income (loss):

Foreign currency translation adjustments

58,591

(15,153)

43,438

Exchange differences on translating foreign operations

Pension liability adjustments

(116,271)

116,271

Remeasurements of defined benefit pension plans

Unrealized gains on securities

146,615

(29,374)

117,241

Financial assets measured at fair value through other comprehensive income

Unrealized gains on derivative instruments

2

48

50

Net changes in the fair value of cash flow hedges

 

 

Reconciliation of Equity as at the End of the Previous Fiscal Year (March 31, 2018)

(Consolidated Statements of Financial Position) (In millions of yen)

Presentation under US GAAP

US GAAP

Re-classification

Recognition and measurement differences

IFRS

Presentation under IFRS

(Assets)

(Assets)

Current assets

2,606,493

(1,434)

(22,324)

2,582,735

Current assets

Cash and cash equivalents

599,199

599,199

Cash and cash equivalents

Trade receivables

1,087,593

14,225

89,711

1,191,529

Trade receivables and contract assets

Inventories

741,782

(95,520)

646,262

Inventories

Prepaid expenses and other current assets

177,919

(15,659)

(16,515)

145,745

Other current assets

1,434

63,345

1,722,845

Non-current assets

Long-term trade receivables

1,965

(1,965)

Investments

614,295

(614,295)

187,828

6,480

194,308

Investments accounted for using the equity method

335,474

27,697

363,171

Other financial assets

Net property, plant and equipment

740,448

(16,191)

724,257

Net property, plant and equipment

Other assets

301,358

94,392

45,359

441,109

Other non-current assets

Total assets

4,264,559

41,021

4,305,580

Total assets

 

 

(In millions of yen)

Presentation under US GAAP

US GAAP

Re-classification

Recognition and measurement differences

IFRS

Presentation under IFRS

(Liabilities)

(Liabilities)

Current liabilities

1,471,367

8,586

8,296

1,488,249

Current liabilities

Bank loans and current portion of long-term debt

122,430

465

122,895

Bonds and borrowings

Trade payables

719,404

(139,838)

579,566

Trade payables

Other current liabilities

629,533

148,424

7,831

785,788

Other current liabilities

(8,586)

(349)

420,112

Non-current liabilities

Long-term debt

189,055

189,055

Bonds and borrowings

Retirement and severance benefits

171,017

503

171,520

Net defined benefit liabilities

Other fixed liabilities

68,975

(8,586)

(852)

59,537

Other non-current liabilities

Total liabilities

1,900,414

7,947

1,908,361

Total liabilities

(Equity)

(Equity)

Mitsubishi Electric Corp. shareholders' equity

2,259,355

34,819

2,294,174

Mitsubishi Electric Corp. stockholders' equity

Common stock

175,820

175,820

Common stock

Capital surplus

213,250

(13,808)

199,442

Capital surplus

Retained earnings

1,857,741

(46,393)

1,811,348

Retained earnings

Accumulated other comprehensive income (loss)

14,472

95,020

109,492

Accumulated other comprehensive income (loss)

Treasury stock at cost

(1,928)

(1,928)

Treasury stock at cost

Noncontrolling interests

104,790

(1,745)

103,045

Non-controlling interests

Total equity

2,364,145

33,074

2,397,219

Total equity

Total liabilities and equity

4,264,559

41,021

4,305,580

Total liabilities and equity

Balance of Debt

311,485

465

311,950

Balance of Debt

Accumulated other comprehensive income (loss):

Accumulated other comprehensive income (loss):

Foreign currency translation adjustments

34,149

(16,600)

17,549

Exchange differences on translating foreign operations

Pension liability adjustments

(141,075)

141,075

Remeasurements of defined benefit pension plans

Unrealized gains on securities

121,413

(29,461)

91,952

Financial assets measured at fair value through other comprehensive income

Unrealized gains (losses) on derivative instruments

(15)

6

(9)

Net changes in the fair value of cash flow hedges

 

 

Notes to reconciliation of equity

 

The principal effects of transition to IFRS in the reconciliation of equity above are as follows:

 

(1) Reclassification

The main elements of reclassification are as follows:

(a) In accordance with the presentation provisions under IFRS, other financial assets are presented separately.

(b) Part of trade receivables, prepaid expenses and other current assets and other assets, etc. are reclassified based on the definition and recognition criteria of IFRS.

(c) Part of trade payables, other current liabilities and other fixed liabilities are reclassified based on the definition and recognition criteria of IFRS.

 

(2) Recognition and measurement differences

The main elements of recognition and measurement differences are as follows:

(a) Employee benefits

Under US GAAP, actuarial gains and losses and past service costs are deferred in accumulated other comprehensive income, subsequently amortized for a specified future period and recognized in profit or loss. Current service costs, interest costs and expected return on plan assets are recognized in profit or loss for the fiscal year.

Under IFRS, on the other hand, changes resulting from remeasurement of defined benefit obligation and plan assets relating to defined-benefit corporate pension plans and lump-sum payment plans required by IFRS are recognized in other comprehensive income, and reclassified from accumulated other comprehensive income directly to retained earnings, not through profit or loss. Past service costs arising from plan amendments are fully recognized immediately in profit or loss. Current service costs are recognized in profit or loss. Interest costs are recognized in profit or loss at the amount determined by multiplying the net amount of the defined benefit obligation and plan assets by the discount rate used to determine the present value of the obligation.

(b) Equity instruments

Under US GAAP, non-marketable equity instruments are recognized at their cost. If fair value of equity instruments has decreased and the decrease is considered not to be temporary, impairment loss is recognized for the amount of the cost of the equity instruments in excess of fair value. Gains or losses on the sale of these equity instruments are recognized in profit or loss.

Under IFRS, on the other hand, all equity instruments are recognized at fair value irrespective of whether there is an active market. Since it is permitted to recognize changes in fair value in other comprehensive income, the Company and its consolidated subsidiaries have elected to recognize changes in fair value of equity instruments in other comprehensive income. Accordingly, loss on impairment and gains or losses on the sale of equity instruments recognized in profit or loss under US GAAP are recognized in other comprehensive income as well.

(c) Income taxes

Under US GAAP, tax expenses incurred by sellers are deferred using the deferral method for differences arising from unrealized profits and losses from intercompany transactions.

Under IFRS, on the other hand, a difference between the carrying amount and the sale price of an asset sold is recognized as a future deductible temporary difference based on the asset-and-liability approach. A deferred tax asset is recognized for the future deductible temporary difference using purchaser's effective tax rate while taking its recoverability into consideration.

Under US GAAP, deferred tax liabilities for temporary differences associated with investments in equity investees are recognized using tax rates applicable on the premise that the temporary difference will be reversed at the time of sale of the equity investees even if a company intends to continue to hold the investments. In principle, deferred tax liabilities are recognized for the undistributed earnings of subsidiaries, etc.

Under IFRS, deferred tax liabilities are in principle recognized for all the taxable temporary differences using tax rates applied when the taxable temporary differences reverse, such as when receiving dividends or selling the investments. Deferred tax liabilities are recognized for the taxable temporary differences associated with investments in subsidiaries etc. which are probable to reverse in the foreseeable future.

 

 

(d) Exchange differences on translating foreign operations

Cumulative exchange differences on translating foreign operations are all deemed to be zero at the date of transition to IFRS. Consequently, exchange differences on translating foreign operations included in accumulated other comprehensive income as at the transition date were fully reclassified to retained earnings.

(e) Exclusion of equity investees

Under US GAAP, when an investee no longer qualifies as an equity investee, the difference between the sale price and the carrying amount of the interest sold is recognized in profit or loss. If an investor retains a residual interest, gains or losses recognized in prior periods remain included in the carrying amount of the residual interest.

Under IFRS, on the other hand, when an investee no longer qualifies as an equity investee, the residual interest is measured at fair value if an investor retains a residual interest. The sale price and the difference between the fair value and the carrying amount of the residual interest at the point when an investee no longer qualifies as an equity investee is recognized in profit or loss.

(f) Government grants

Under US GAAP, government grants related to acquisition of assets are not reflected in the carrying amounts of assets because there are no accounting standards for such government grants.

Under IFRS, on the other hand, government grants related to assets are recognized as reducing the carrying amount of the asset by the government grants received.

(g) Impairment of non-financial assets

Under US GAAP, if there is an indication that a fixed asset may be impaired, the carrying amount and the undiscounted estimated future cash flows of the asset is compared. If the carrying amount exceeds the estimated future cash flows, any excess of the carrying amount over the fair value is recognized as an impairment loss.

Under IFRS, on the other hand, if there is an indication that a fixed asset may be impaired, any excess of the carrying amount over the recoverable amount of the fixed asset (the higher of value in use or fair value less costs of disposal) is recognized as an impairment loss of the fixed asset.

(h) Business combinations

Under US GAAP, in business combinations, the acquirer measures the acquiree as a whole (including non-controlling interests) at fair value and goodwill is recognized including the portion of goodwill attributable to the non-controlling interests.

Under IFRS, on the other hand, in business combinations it is permitted to elect to apply either method: the acquirer measures the acquiree as a whole (including non-controlling interests) at fair value and goodwill is recognized including the portion of goodwill attributable to the non-controlling interests; or non-controlling interest is measured as a proportional interest in the fair value of the acquiree's net identifiable assets and goodwill is recognized only for the acquirer's share. The Company elected the method of measuring non-controlling interest as a proportional interest in the fair value of the acquiree's net identifiable assets and recognizing goodwill only for the acquirer's share. Capital surplus is recognized when non-controlling interests are additionally acquired after the date when control was obtained.

 

Reconciliation of Profit or Loss and Comprehensive Income for the First 9 Months of the Previous Fiscal Year (from April 1, 2017 to December 31, 2017)

(Condensed Quarterly Consolidated Statements of Profit or Loss) (In millions of yen)

Presentation under US GAAP

US GAAP

Re-classification

Recognition and measurement differences

IFRS

Presentation under IFRS

Net sales

3,115,012

71,743

3,186,755

Net sales

Cost of sales

2,112,607

(4)

94,750

2,207,353

Cost of sales

Selling, general and administrative expenses

768,464

723

(26,992)

742,195

Selling, general and administrative expenses

Loss on impairment of long-lived assets

1,532

(1,532)

290

449

739

Other profit

Operating income

232,409

1,103

4,434

237,946

Operating income

Other income

51,587

Interest and Dividends

7,247

22,124

(21,825)

7,546

Financial income

Equity in earnings of affiliated companies

15,696

(15,696)

Other

28,644

(28,644)

Other expenses

6,769

Interest

2,044

6

(6)

2,044

Financial expenses

Other

4,725

(4,725)

15,696

30

15,726

Share of profit of investments accounted for using the equity method

Income before income taxes

277,227

(698)

(17,355)

259,174

Income before income taxes

Income taxes

75,883

(698)

(8,620)

66,565

Income tax expenses

Net income

201,344

(8,735)

192,609

Net income

Net income attributable to:

Net income attributable to the noncontrolling interests

8,226

313

8,539

Non-controlling interests

Net income attributable to Mitsubishi Electric Corp.

193,118

(9,048)

184,070

Mitsubishi Electric Corp. stockholders

 

 

(Condensed Quarterly Consolidated Statements of Comprehensive Income) (In millions of yen)

Presentation under US GAAP

US GAAP

Re-classification

Recognition and measurement differences

IFRS

Presentation under IFRS

Net income

201,344

(8,735)

192,609

Net income

Other comprehensive income (loss), net of tax

(Other comprehensive income (loss), net of tax)

Items that will not be reclassified to net income

Unrealized gains on securities

10,379

(829)

13,795

23,345

Financial assets measured at fair value through other comprehensive income

Pension liability adjustments

40,693

(352)

(40,341)

Remeasurements of defined benefit pension plans

1,181

(352)

829

Share of other comprehensive income of investments accounted for using the equity method

(26,898)

24,174

Subtotal

Items that may be reclassified to net income

Foreign currency translation adjustments

43,830

(1,127)

3,278

45,981

Exchange differences on translating foreign operations

Unrealized gains (losses) on derivative instruments

(65)

3

65

3

Net changes in the fair value of cash flow hedges

1,124

(44)

1,080

Share of other comprehensive income of investments accounted for using the equity method

3,299

47,064

Subtotal

Total

94,837

(23,599)

71,238

Total other comprehensive income

Comprehensive income

296,181

(32,334)

263,847

Comprehensive income

Comprehensive income attributable to:

Comprehensive income attributable tothe noncontrolling interests

12,074

199

12,273

Non-controlling interests

Comprehensive income attributable toMitsubishi Electric Corp.

284,107

(32,533)

251,574

Mitsubishi Electric Corp. stockholders

 

 

Reconciliation of Profit or Loss and Comprehensive Income for the Third Quarter of the Previous Fiscal Year (from October 1, 2017 to December 31, 2017)

(Condensed Quarterly Consolidated Statements of Profit or Loss) (In millions of yen)

Presentation under US GAAP

US GAAP

Re-classification

Recognition and measurement differences

IFRS

Presentation under IFRS

Net sales

1,038,670

36,318

1,074,988

Net sales

Cost of sales

700,366

120

44,308

744,794

Cost of sales

Selling, general and administrative expenses

255,191

241

(9,250)

246,182

Selling, general and administrative expenses

677

432

1,109

Other profit (loss)

Operating income

83,113

316

1,692

85,121

Operating income

Other income

9,899

Interest and Dividends

2,362

921

(536)

2,747

Financial income

Equity in earnings of affiliated companies

5,729

(5,729)

Other

1,808

(1,808)

Other expenses

1,028

Interest

605

73

(73)

605

Financial expenses

Other

423

(423)

5,729

10

5,739

Share of profit of investments accounted for using the equity method

Income before income taxes

91,984

(221)

1,239

93,002

Income before income taxes

Income taxes

27,354

(221)

46

27,179

Income tax expenses

Net income

64,630

1,193

65,823

Net income

Net income attributable to:

Net income attributable to the noncontrolling interests

2,636

89

2,725

Non-controlling interests

Net income attributable to Mitsubishi Electric Corp.

61,994

1,104

63,098

Mitsubishi Electric Corp. stockholders

 

 

(Condensed Quarterly Consolidated Statements of Comprehensive Income) (In millions of yen)

Presentation under US GAAP

US GAAP

Re-classification

Recognition and measurement differences

IFRS

Presentation under IFRS

Net income

64,630

1,193

65,823

Net income

Other comprehensive income (loss), net of tax

(Other comprehensive income (loss), net of tax)

Items that will not be reclassified to net income

Unrealized gains on securities

13,675

(232)

181

13,624

Financial assets measured at fair value through other comprehensive income

Pension liability adjustments

22,824

(10)

(22,814)

Remeasurements of defined benefit pension plans

242

(10)

232

Share of other comprehensive income of investments accounted for using the equity method

(22,643)

13,856

Subtotal

Items that may be reclassified to net income

Foreign currency translation adjustments

17,165

(1,255)

(1,488)

14,422

Exchange differences on translating foreign operations

Unrealized gains on derivative instruments

17

(11)

(8)

(2)

Net changes in the fair value of cash flow hedges

1,266

(1)

1,265

Share of other comprehensive income of investments accounted for using the equity method

(1,497)

15,685

Subtotal

Total

53,681

(24,140)

29,541

Total other comprehensive income

Comprehensive income

118,311

(22,947)

95,364

Comprehensive income

Comprehensive income attributable to:

Comprehensive income attributable tothe noncontrolling interests

4,449

36

4,485

Non-controlling interests

Comprehensive income attributable toMitsubishi Electric Corp.

113,862

(22,983)

90,879

Mitsubishi Electric Corp. stockholders

 

 

Reconciliation of Profit or Loss and Comprehensive Income for the Previous Fiscal Year (from April 1, 2017 to March 31, 2018)

(Consolidated Statements of Profit or Loss) (In millions of yen)

Presentation under US GAAP

US GAAP

Re-classification

Recognition and measurement differences

IFRS

Presentation under IFRS

Net sales

4,431,198

13,226

4,444,424

Net sales

Cost of sales

3,030,902

53,024

3,083,926

Cost of sales

Selling, general and administrative expenses

1,061,778

729

(34,623)

1,027,884

Selling, general and administrative expenses

Loss on impairment oflong-lived assets

19,881

(19,881)

(20,990)

15,820

(5,170)

Other profit (loss)

Operating income

318,637

(1,838)

10,645

327,444

Operating income

Other income

60,414

Interest and Dividends

8,611

23,637

(23,637)

8,611

Financial income

Equity in earnings of affiliated companies

22,261

(22,261)

Other

29,542

(29,542)

Other expenses

14,473

Interest

2,727

4,726

(657)

6,796

Financial expenses

Other

11,746

(11,746)

22,261

1,686

23,947

Share of profit of investments accounted for using the equity method

Income before income taxes

364,578

(723)

(10,649)

353,206

Income before income taxes

Income taxes

82,239

(723)

5,291

86,807

Income tax expenses

Net income

282,339

(15,940)

266,399

Net income

Net income attributable to:

Net income attributable to the noncontrolling interests

10,459

185

10,644

Non-controlling interests

Net income attributable to Mitsubishi Electric Corp.

271,880

(16,125)

255,755

Mitsubishi Electric Corp. stockholders

 

 

(Consolidated Statements of Comprehensive Income) (In millions of yen)

Presentation under US GAAP

US GAAP

Re-classification

Recognition and measurement differences

IFRS

Presentation under IFRS

Net income

282,339

(15,940)

266,399

Net income

Other comprehensive income (loss), net of tax

(Other comprehensive income (loss), net of tax)

Items that will not be reclassified to net income

Unrealized gains (losses) on securities

(14,875)

392

14,431

(52)

Financial assets measured at fair value through other comprehensive income

Pension liability adjustments

15,857

(596)

6,062

21,323

Remeasurements of defined benefit pension plans

204

(34)

170

Share of other comprehensive income of investments accounted for using the equity method

20,459

21,441

Subtotal

Items that may be reclassified to net income

Foreign currency translation adjustments

17,023

(1,908)

1,877

16,992

Exchange differences on translating foreign operations

Unrealized gains (losses) on derivative instruments

(88)

(6)

23

(71)

Net changes in the fair value of cash flow hedges

1,914

(45)

1,869

Share of other comprehensive income of investments accounted for using the equity method

1,855

18,790

Subtotal

Total

17,917

22,314

40,231

Total Other comprehensive income

Comprehensive income

300,256

6,374

306,630

Comprehensive income

Comprehensive income attributable to:

Comprehensive income attributable tothe noncontrolling interests

11,852

68

11,920

Non-controlling interests

Comprehensive income attributable toMitsubishi Electric Corp.

288,404

6,306

294,710

Mitsubishi Electric Corp. stockholders

 

Notes to Reconciliation of Profit or Loss and Comprehensive Income

The principal effects of transition to IFRS in the reconciliation of profit or loss and comprehensive income above are as follows:

 

(1) Reclassification

The main elements of reclassification are as follows:

(a) In accordance with the presentation provisions under IFRS, financial income and financial expenses are presented separately.

(b) In accordance with the presentation provisions under IFRS, part of other income and other expenses, etc. is included and presented in operating profit.

(c) Unrealized gains (losses) on securities, pension liability adjustments, foreign currency translation adjustments and unrealized gains (losses) on derivative instruments in other comprehensive income that are attributable to equity investees are reclassified in accordance with the presentation provisions under IFRS.

 

(2) Recognition and measurement differences

The main elements of recognition and measurement differences are as follows:

(a) Reconciliation of sales and cost of sales

Under US GAAP, if amounts of construction contracts cannot be reliably estimated, all construction costs and construction revenue are recognized when the construction is complete.

Under IFRS, on the other hand, revenue from a performance obligation satisfied over time is recognized using the cost recovery method if the outcome cannot be reliably estimated. Revenues using the cost recovery method are only recognized for costs incurred to the extent that it is probable that the cost will be recovered and costs are recognized as expenses in the period in which they are incurred.

(b) Equity instruments

Non-marketable equity instruments are recognized at their cost under US GAAP. If fair value of equity instruments has decreased and the decrease is considered not to be temporary, impairment loss is recognized for the amount of the cost of the equity instruments in excess of fair value. Gains or losses on the sale of these equity instruments are recognized in profit or loss.

Under IFRS, on the other hand, equity instruments are recognized at fair value irrespective of whether there is an active market. Because it is permitted to recognize changes in fair value in other comprehensive income, the Company and its consolidated subsidiaries have elected to recognize changes in fair value of equity instruments in other comprehensive income. Accordingly, loss on impairment and gains or losses on the sale of equity instruments recognized in profit or loss under US GAAP are recognized in other comprehensive income as well.

 

Notes to Reconciliation of Cash Flows

There are no significant differences in the statement of cash flows resulting from transition from US GAAP to IFRS.

 

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 a decline in value of the Group's marketable securities and 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.

 

###

 

About Mitsubishi Electric Corporation

With nearly 100 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 4,444.4 billion yen (in accordance with IFRS; US$ 41.9 billion*) in the fiscal year ended March 31, 2018. For more information visit:

www.MitsubishiElectric.com

*At an exchange rate of 106 yen to the US dollar, the rate given by the Tokyo Foreign Exchange Market on March 31, 2018

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
END
 
 
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