Mitsubishi Electric Announces Consolidated and Non-Consolidated Half-Year Results for the Period of April 1, 2003 - September 30, 2003.Business Editors TOKYO--(BUSINESS WIRE)--Oct. 30, 2003 Mitsubishi Electric Mitsubishi Electric Corporation (三菱電機株式会社 Corporation today announced its consolidated and non-consolidated financial results for the half-year ended September 30, 2003 as follows:
Consolidated:
Net sales 1.5641 trillion yen (5% decrease from
the previous semiannual period)
Operating income 12.0 billion yen (48% decrease from the
previous semiannual period)
Income before income taxes 16.8 billion yen (43% increase from the
previous semiannual period)
Net income 3.8 billion yen (44% decrease from the
previous semiannual period)
Non-consolidated:
Net sales 911.3 billion yen (13% decrease from the
previous semiannual period)
Operating income - 3.0 billion yen
Ordinary profit 21.4 billion yen (136% increase from the
previous semiannual period)
Net income 17.2 billion yen (89% increase from the
previous semiannual period)
The business environment during the fiscal 2004 interim period saw a recovery centering on the corporate sector in the U.S. together with the expansion of economies in parts of Asia. However, as a whole, the feeling of recovery in the global economy was weak. Furthermore, though the deceleration deceleration /de·cel·er·a·tion/ (de-sel?er-a´shun) decrease in rate or speed. early deceleration trend of the Japanese economy appeared to be halting halt·ing adj. 1. Hesitant or wavering: a halting voice. 2. Imperfect; defective: halting verse. 3. Limping; lame. , severe economic conditions continued with the advancing of deflation deflation: see inflation. deflation Contraction in the volume of available money or credit that results in a general decline in prices. A less extreme condition is known as disinflation. , a lack of power in the recovery of domestic demand and other factors. Under these circumstances, Mitsubishi Electric spun off its semiconductor business centered on system LSIs and formed a joint venture, Renesas Technology Renesas Technology Corporation (ルネサス テクノロジ| Corporation (hereafter In the future. The term hereafter is always used to indicate a future time—to the exclusion of both the past and present—in legal documents, statutes, and other similar papers. Renesas), with Hitachi, Ltd. on April 1, 2003. In addition, we spun off the industrial electric and automation systems business for manufacturing plants and set up a joint venture, Toshiba Mitsubishi Electric Industrial Systems Corporation, with Toshiba Corporation (company) Toshiba Corporation - A Japanese technology manufacturer with 364 subsidiaries worldwide. Toshiba makes and sells electronics for home, office, industry and health care including information and communication systems, electronic components, heavy electrical apparatus, on October 1, 2003. We have thus continued to focus on improving and reinforcing the profitability of each business by promoting the structural reformation Reformation, religious revolution that took place in Western Europe in the 16th cent. It arose from objections to doctrines and practices in the medieval church (see Roman Catholic Church) and ultimately led to the freedom of dissent (see Protestantism). of business. Furthermore, we have continued to pursue with resolute res·o·lute adj. Firm or determined; unwavering. [Middle English, dissolved, dissolute, from Latin resol corporate wide management improvement measures including activities to improve our financial base such as the "EA21 Activities" to reduce assets and fixed costs fixed costs, n.pl the costs that do not change to meet fluctuations in enrollment or in use of services (e.g., salaries, rent, business license fees, and depreciation). , "E SIGMA 21 Project Activities" to reform our materials procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases. structure and "Inventory Reduction Project." In addition to this, we are also implementing a growth strategy built around the two wheels of the "VI Strategy" and "AD Strategy" towards the increasing of added value Added value in financial analysis of shares is to be distinguished from value added. Used as a measure of shareholder value, calculated using the formula:
v. height·ened, height·en·ing, height·ens v.tr. 1. To raise or increase the quantity or degree of; intensify. 2. To make high or higher; raise. v.intr. performance and our financial standing. Consolidated Results by Business Segment In the Energy and Electric Systems segment, compared to the corresponding period in the previous year, sales decreased by 2% to 324.7 billion yen and operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. was 5.7 billion yen, a decrease of 14.7 billion yen compared to the corresponding period of the previous fiscal year. Social infrastructure systems fell short of their year-ago levels both for orders and net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight due to the spinning off of our power systems and substation businesses, along with the restraining RESTRAINING. Narrowing down, making less extensive; as, a restraining statute, by which the common law is narrowed down or made less extensive in its operation. of private capital investment by Japanese power companies and the manufacturing industry, the suppression of public works public works pl.n. Construction projects, such as highways or dams, financed by public funds and constructed by a government for the benefit or use of the general public. Noun 1. spending, and the shrinking of major overseas construction. Building systems posted a level of orders similar to last year despite slumping new demand for elevators and escalators in Japan. However, an increase in orders in South Korea and the Middle East led to an increase in net sales from the corresponding period of the previous fiscal year. As a result, total sales for this segment showed a 2% decrease, while operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. showed a decrease of 14.7 billion yen due to decreased sales and a drop in sales prices. The Industrial Automation Systems segment, compared to the corresponding period in the previous year, experienced a 9% increase in sales to 336.8 billion yen while operating income decreased by 1.9 billion yen to 26.0 billion yen. The FA systems business saw an increase from the corresponding period of the previous fiscal year in both orders and sales through increases in semiconductor and liquid crystal panel manufacturing equipment for the domestic market, and programmable controllers Programmable controllers Electronic computers that are used for the control of machines and manufacturing processes through the implementation of specific functions such as logic, sequencing, timing, counting, and arithmetic. , servo An electromechanical device that uses feedback to provide precise starts and stops for such functions as the motors on a tape drive or the moving of an access arm on a disk. motor systems and numerical controllers for the automotive market in Taiwan, South Korea, China and other parts of Asia. The automotive equipment business posted an increase from the corresponding period of the previous fiscal year in net sales due to increases in car navigation See GPS. systems, ETC ETC - ExTendible Compiler. Fortran-like, macro extendible. "ETC - An Extendible Macro-Based Compiler", B.N. Dickman, Proc SJCC 38 (1971). onboard Refers to a chip or other hardware component that is directly attached to the printed circuit board (motherboard). Contrast with offboard. See inboard. units, as well as alternators and starters for overseas automobile manufacturers. As a result, total sales for this segment increased by 9% over the previous year, while operating income showed a decrease of 1.9 billion yen due to price decrease and other factors. The Information and Communication Systems segment posted an increase in net sales of 4% to 331.6 billion yen and an operating loss of 3.4 billion yen, which was an improvement of 3.1 billion yen from the corresponding period of the previous fiscal year. In the telecommunications equipment business, demand fell for wireless base stations and this led to a drop in orders from the corresponding period of the previous fiscal year. However, the increase in exports of wireless base stations led to greater net sales than the same period last year. In the information systems and services business, there was an increase in businesses related to outsourcing of information systems and systems integration and net sales surpassed the same period of last year. In the space business, we are in a period between large governmental projects, which led to decreases in both orders and net sales compared to last year. As for the defense electronics business, the decrease in major projects led to a drop in orders from the corresponding period of the previous fiscal year but net sales exceeded the same period of last year. As a result, total sales for this segment showed an increase of 4% from the corresponding period of the previous fiscal year, while operating income improved by 3.1 billion yen due to increased sales and other factors. The Electronic Devices segment recorded net sales of 87.3 billion yen, a 61% decrease from the corresponding period of the previous fiscal year, while operating income improved by 20.5 billion yen to a loss of 4.5 billion yen. The semiconductor business posted increases in laser diodes A semiconductor-based laser used to generate analog signals or digital pulses for transmission through optical fibers. Both laser diodes and LEDs (light-emitting diodes) are used for this purpose, but the laser diode generates a smaller beam that is easier to couple with the smaller core for recordable DVD See DVD-R, DVD-RW, DVD+RW and DVD-RAM. players, semiconductor manufacturing equipment and power modules for industrial machinery bound for Asia centering on China. However, the impact from spinning off the system LSI LSI: see integrated circuit. (Large Scale Integration) Between 3,000 and 100,000 transistors on a chip. See SSI, MSI, VLSI and ULSI. and system memory businesses led to decreases from the corresponding period of the previous fiscal year in both orders and net sales. On the liquid crystal business front, FA display devices and other products for the industrial sector did well, but the drop in prices within the general use panel sector and other factors led to decreases from the corresponding period of the previous fiscal year in both orders and net sales. As a result, total sales for this segment showed a decrease of 61% from the previous year, while operating income improved by 20.5 billion yen due to the improved performance of the semiconductor business and other factors. In the Home Appliances segment, compared to the corresponding period in the previous year, net sales increased 9% to 403.4 billion yen while operating income was 9.6 billion yen, a 13.3 billion yen decrease. In the home appliance business, sales in ventilators, hot water heaters, solar power generation systems and other residential home equipment for the domestic market, DVD-related equipment, and packaged and home air conditioners Conditioners used on leather take many shapes and forms. They are used mostly to keep leather from drying out and deteriorating. A very old and widely used conditioner is dubbin. for Europe increased. These increases offset the decrease in home air conditioners, refrigerators and other appliances for the domestic market, leading to an overall sales increase from the previous year. As a result, total sales for this segment increase by 9% from the corresponding period of the previous fiscal year, while operating income decreased by 13.3 billion yen due to decreased sales prices and other factors. In the Others segment, compared to the corresponding period in the previous year, net sales decreased by 9% to 240.7 billion yen while operating income decreased 3.7 billion yen to 2.2 billion yen. Overall sales decreased due mainly to the change of our credit subsidiary into an equity method company. As a result, total sales for this segment decreased by 9% from the corresponding period from the previous fiscal year, while operating income decreased by 3.7 billion yen due to the decreased in sales and other factors. Dividend We must forgo the interim shareholder dividend for the current year. Furthermore, we plan to implement year-end dividend Year-end dividend A special dividend declared at the end of a fiscal year that usually represents distribution of higher-than-expected company profits. year-end dividend See final dividend. after confirming the overall performance for the year. We will continue to steadily strengthen our financial position and enhance profitability, which will improve the profit of shareholders. Financial Position (consolidated basis) Assets, liabilities and shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. : The company's total balance of assets and liabilities declined greatly from the end of the previous fiscal year, due to progress in asset reduction, spinning off of our semiconductor business centering on system LSIs to form Renesas, and other factors. The company's total asset declined by 369.4 billion yen from the end of the previous fiscal year to 3,304.1 billion yen. Major changes included reductions of 190.1 billion yen in trade receivables, 53.7 billion yen in inventories, and 133.4 billion yen in tangible fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → , respectively, while investments increased by 76.5 billion yen due to the appropriation of investment in Renesas. As for liabilities, the balance of total interest bearing debt outstanding fell 188.1 billion yen from the end of the previous fiscal year to 996.0 billion yen, reducing the loan ratio to 30.1% (an improvement of 2.1 point from the end of the previous fiscal year). Trade payables declined by 93.9 billion yen, while employee retirement and severance benefits reserve decreased by 96.9 billion yen. As for shareholders' equity, consolidated retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. decreased 2.6 billion yen due to the appropriation of net income of 3.8 billion yen and the dividend payment of 6.4 billion yen. Meanwhile, a reduction of exemption in minimum pension liability adjustments, along with an increase of net unrealized gains Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. on securities and other factors, have resulted in total increase of shareholders' equity balance to 429.4 billion yen, 34.8 billion yen more than the end of the previous fiscal year, increasing the company's shareholders' equity ratio by 2.3 points to 13.0%. Cash flow The company's cash flows from operating activities increased 17.5 billion yen from the corresponding period of the previous fiscal year to 142.2 billion yen (provided). Meanwhile, cash flows from investment activities decreased 4.6 billion yen to 35.3 billion yen (used), mainly due to the reduction of capital expenditure in the semiconductor business that had been spun off to Renesas. As a result, the free cash flow achieved an income of 106.8 billion yen. On the other hand, cash flows from financial activities represented net cash used of 111.1 billion yen, mainly due to the progress in loan repayment and bond redemptions for improved financial standing. Annual Forecast for Fiscal 2004 (The year ending March 31st, 2004) Expectations for an economic recovery is growing both in Japan and overseas, but the severe business climate is expected to continue with lack of transparency regarding the period of a full recovery in demand, further intensification in·ten·si·fy v. in·ten·si·fied, in·ten·si·fy·ing, in·ten·si·fies v.tr. 1. To make intense or more intense: of global competition and concern over foreign exchange trends. Under these circumstances, the Mitsubishi Electric Group will continue to seek to further improve performance and our financial base while reinforcing our management foundation. The steps being taken to do so include improving and reinforcing profitability in each segment and continuing to promote management improvement measures across the corporation, and also steadily implement growth strategies to expand added value. Our fiscal 2004 performance forecast as of now is as follows. No change has been made from the revised values of our performance forecast announced on September 22, 2003.
Consolidated:
Net sales 3.3000 trillion yen (9% decrease
year-on-year)
Operating income 80.0 billion yen (27% increase
year-on-year)
Income before income taxes 20.0 billion yen (708% increase
year-on-year)
Net income 12.0 billion yen
Non-consolidated:
Net sales 2.0500 trillion yen (12% decrease
year-on-year)
Operating income 30.0 billion yen (49 times year-on-year)
Ordinary profit 35.0 billion yen (32% increase
year-on-year)
Net income 29.0 billion yen
Note: The forecast of results above is based on assumptions deemed reasonable by the Company at the present time, and actual results may differ significantly from forecasts. MANAGEMENT POLICY Management Policy The Mitsubishi Electric Group intends to contribute to a new society, industry and daily life based on the spirits of its corporate statement "Changes for the Better" as a foundation from which to achieve a "better tomorrow." With this end in view, the group will seek to establish a solid management base and sustainable growth with the help of "balanced management" from the three critical areas of "growth," "profitability and efficiency" and "soundness." Furthermore, we seek to fulfill the expectations of our customers, shareholders and other stakeholders Stakeholders All parties that have an interest, financial or otherwise, in a firm-stockholders, creditors, bondholders, employees, customers, management, the community, and the government. by channeling our efforts to further enhance corporate value through our self-reformation as a strong conglomerate of electric and electronic businesses with robust synergy. Policy on Profit Sharing profit sharing, arrangement by which employees receive, in addition to their wages, a share of the net profits of a business. The purpose is to give them an incentive to increase their output through enhanced morale, less wasteful use of materials, better care of With the ultimate aim of enhancing corporate value, our basic policy is to seek a comprehensive improvement in enhancing shareholder value by distributing as much profit as may be permitted by our current year earnings position, while at the same time retaining sufficient profit to strengthen the group's financial position. Policy on Reducing Minimum Stock Purchase Requirement Mitsubishi Electric recognizes that one of its most important management goals must be to enhance corporate value along with the number of stable, long-term shareholders. With this in mind, we will continue carrying out a meticulous me·tic·u·lous adj. 1. Extremely careful and precise. 2. Extremely or excessively concerned with details. [From Latin met study of the overall benefits and costs of reducing the size of purchase requirements for our stock-trading units. Issues the Company Must Confront The Mitsubishi Electric Group will strive to further improve its performance and financial base and reinforce its management foundation. This shall be done by resolutely res·o·lute adj. Firm or determined; unwavering. [Middle English, dissolved, dissolute, from Latin resol pursuing the following management measures from the three perspectives of a balanced management -- "growth," "profitability and efficiency" and "soundness." *We will continue to pursue corporate wide management improvement measures including dramatic restructuring and fixed cost structure reformation, cost reduction promotion, and improving the soundness of our financial structure in line with changes in the business environment. *We will pursue a growth strategy built around the two elements of our "VI strategy" (reinforcing individual business strategies) and "AD strategy" (reinforcing the solutions business across multiple business fields) with superior market businesses as a core, and applying our synergy of broad business areas. *We will more strongly implement a global management policy that includes the pursuit of global integration, in which we aim to establish optimum business structure from a global viewpoint, combined with strengthening our research and development, marketing and finance, etc. *We will strive to further strengthen our environmental management built around the implementation of the "4th Environment Plan" (Fiscal 2004-2006), the voluntary measures of our group, as we aim to realize a sustainable society. Basic Thinking on Corporate Governance Corporate Governance The relationship between all the stakeholders in a company. This includes the shareholders, directors, and management of a company, as defined by the corporate charter, bylaws, formal policy, and rule of law. and Status of the Implementation of Measures With the approval of our general shareholders' meeting shareholders' meeting n. a meeting, usually annual, of all shareholders of a corporation (although in large corporations only a small percentage attend) to elect the Board of Directors and hear reports on the company's business situation. held in June 2003, Mitsubishi Electric has reformed its management structure by transforming to a "Company with Committee" structure. This transformation will further heighten the dynamistic and transparency of our management while also be used to reinforce supervision on management and achieve sustainable growth. By separating the supervision of management and execution functions traditionally handled by the board of directors, the board of directors will now handle the supervision of management function and the executive officers will handle the management execution function. The broad authority that had been the exclusive realm of the board of directors has been transferred to the executive officers. Furthermore, the auditing committee, nomination committee, and compensation committee have been established as internal organizations of the board of directors with a majority of members comprised of outside directors. A key characteristic of our management structure is separation of the chairman of the board, who is the head of our management supervisory function, and the president, who is the chief executive officer. Clear-cut implementation to the separation of management supervision and execution have made our corporate governance much more effective. In addition, we have established a board of executive officers for executive officers to debate and decide important items related to the execution of management in their role of responsibility for making decisions on and implementing execution of operations. This was done from the perspectives of having them all participate in management and share information, to pursue management synergy effects and multiple risk management aspects. Further, our five outside directors are providing advice and supervision to our company's management from an objective perspective. Furthermore, there is no special interest relationship between our company and any of our outside directors. Cautionary Statement The expectation of operating results herein and any associated statement to be made with respect to Company's current plans, estimates, strategies and beliefs and any other statements that are not historical facts are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . Words such as "expects", "anticipates", "plans", "believes", "scheduled", "estimated", "targeted" along with any variations of these words and similar expressions are intended to identify forward-looking statements which include but are not limited to projections of revenues, earnings, performance and production. While the statements herein are based on certain assumptions and premises that trusts and considers to be reasonable under the circumstances to the date of announcement, you are requested to kindly take note that actual operating results are subject to change due to any of the factors as contemplated hereunder Adv. 1. hereunder - in a subsequent part of this document or statement or matter etc.; "the landlord demises unto the tenant the premises hereinafter called the demised premises"; "the terms specified hereunder" hereafter, hereinafter 2. and/or any additional factor unforeseeable Un`fore`see´a`ble a. 1. Incapable of being foreseen. Adj. 1. unforeseeable - incapable of being anticipated; "unforeseeable consequences" unpredictable - not capable of being foretold 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) Any change in operating circumstances in any of the markets, in which the Company conducts its business operation inter alia [Latin, Among other things.] A phrase used in Pleading to designate that a particular statute set out therein is only a part of the statute that is relevant to the facts of the lawsuit and not the entire statute. Japan, the USA and Europe: such change shall include but not limited to changes in economic situation, political regime, legal system and legislation, relevant laws and regulations, administrative policies and practices by any competent authorities, taxation in any of such markets. (2) Foreign exchange fluctuations, in particular, the rate of Japanese yen “Yen” redirects here. For the other use, see Yen (disambiguation). “JPY” redirects here. For the Australian singer with the same moniker, see John Paul Young. against US Dollar. (3) Relative disproportion disproportion /dis·pro·por·tion/ (dis?prah-por´shun) a lack of the proper relationship between two elements or factors. cephalopelvic disproportion between demand and supply of any products that may affect price and volume, which could be highly intrusive in such fields like information, telecommunication, electronic devices and home appliances, without limitation thereto. (4) Shortage of any devices, components and/or parts necessary for manufacturing operation and difficulties in material procurement arising out of such shortage, which could even lead to substantial disconformity dis·con·form·i·ty n. pl. dis·con·form·i·ties 1. Geology A type of unconformity in which the rock layers are parallel. 2. Refusal or failure to conform; nonconformity. with the operating results as expected herein. Also this factor could be highly intrusive in such fields as information, telecommunication, electronic devices and home appliances, without limitation thereto. (5) Any change in technical and technological trends that may be relevant to businesses of the Company, including but not limited to IT-based or IT-related fields. (6) Any patent and its licensing that may be granted from time to time and may affect businesses of the Company. (7) Any development of products incorporating new technological innovation and the time of their introduction in the marketplace. (8) Any business alliances of any nature whatsoever, including but not limited to joint ventures, business transfers, mergers, acquisitions, capital contributions, technical licensing or co-development. (9) Any change in fund raising or procurement, inter alia in the Japanese financial market. (10) Any fluctuation Fluctuation A price or interest rate change. in stock quotations at any relevant markets including securities exchanges and over-the counter stock markets, inter alia in Japan. About Mitsubishi Electric With over 80 years of experience in providing reliable, high-quality products to both corporate clients and general consumers all over the world, Mitsubishi Electric Corporation (TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). : 6503) is a recognized world leader in the manufacture, marketing and sales of electrical and electronic equipment used in information processing information processing: see data processing. information processing Acquisition, recording, organization, retrieval, display, and dissemination of information. Today the term usually refers to computer-based operations. and communications, space development and satellite communications, consumer electronics, industrial technology, energy, transportation and building equipment. The company has operations in 35 countries and recorded consolidated group sales Group sales Block sale (of large amounts) of securities to institutional investors. group sales The distribution of a new security issue to institutional clients. of 3,639 billion yen (US$30.3 billion*) in the year ended March 31, 2003. For more information visit http://global.mitsubishielectric.com. *At an exchange rate of 120 yen to the US dollar, the rate given by the Tokyo Foreign Exchange Market on March 31, 2003. |
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