MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 01
01
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
To Our Shareholders and Investors
Corporate Mission
The Mitsubishi Electric Group will continually improve
its technologies and services by applying creativity to
all aspects of its business. By doing so, we enhance the
quality of life in our society. To this end, all members of
the Group will pursue the following Seven Guiding
Principles.
Seven Guiding Principles
Trust, Quality, Technology, Citizenship, Ethics and
Compliance, Environment, Growth
During the fiscal year ended March 31, 2019 (hereinafter fiscal 2019), the econ-
omy saw a buoyant expansion in the U.S. and a slight slowdown in the Chinese
economy, while there were gradual trends of recovery in Japan and Europe
despite a recent slowdown in some indicators such as export and production. In
addition, the yen, compared to the previous fiscal year, was substantially
unchanged against the U.S. dollar, and remained strong against the euro in and
after August.
Under these circumstances, the Mitsubishi Electric Group has been working
even harder than before to promote growth strategies rooted in its advantages,
while continuously implementing initiatives to strengthen its competitiveness and
business structure.
As a result, in fiscal 2019, the Mitsubishi Electric Group recorded revenue of
¥4,519.9 billion, up 2% from the previous fiscal year, operating profit of ¥290.4
billion, down 11%.
In accordance with its management targets, the Group will remain committed
to maintaining a return on equity (ROE) of above 10% and keeping the ratio of
interest-bearing debt to total assets below 15% while striving to achieve its
growth targets for fiscal 2021, namely, consolidated revenue of ¥5 trillion or more
and an operating income ratio of 8% or more. Moving forward toward securing
sustained business expansion thereafter, the Mitsubishi Electric Group will also
keep a focus on committing to a variety of management initiatives.
Based on our Corporate Mission and Seven Guiding Principles, we of the
Mitsubishi Electric Group position Corporate Social Responsibility (CSR) initiatives
as our main pillar of corporate management. Accordingly, the entire Group is
committed to providing solutions that combine products, systems, and services to
address the challenges that society faces, such as environmental issues and
02 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
resource and energy issues. In this way, we will further promote initiatives to cre-
ate value, such as simultaneous achievement of "sustainability," and "safety,
security, and comfort" in the four fields of Life, Industry, Infrastructure and
Mobility.
In an effort to promote value creation, in addition to enhancing business foun-
dations (connection with customers, technologies, personnel, products, corporate
culture,etc.) and evolving Technology Synergies and Business Synergies through
strengthening all forms of collaboration while maintaining Balanced Corporate
Management based on three perspectives: growth, profitability and efficiency, and
soundness, the Mitsubishi Electric Group will transform our business models.
As we resolutely advance forward to achieve our goals, we ask for your
continued support.
July 2019
President & CEO Takeshi Sugiyama
Financial Highlights
Performance for the Year Ended March 31, 2019
Years ended March 31
Revenue
Operating profit
Net profit attributable to Mitsubishi Electric Corp. stockholders
Total assets
Bonds and borrowings
Mitsubishi Electric Corp. stockholders' equity
Capital expenditure
(Based on the recognized value of property, plant and equipment)
R&D expenditures
Per Share Amounts
Earnings per share attributable to Mitsubishi Electric Corp. stockholders
Basic
Diluted
Cash dividends declared
Statistical Information
Operating profit ratio
Return on equity (ROE)
Bonds and borrowings to total assets
2018
¥4,444,424
327,444
255,755
4,305,580
311,950
2,294,174
181,513
210,308
¥119.19
119.19
40
7.4%
11.7
7.2
2019
¥4,519,921
290,477
226,648
4,356,211
298,438
2,399,946
198,442
212,794
¥105.65
105.65
40
Yen
(millions)
U.S. dollars
(thousands)
2019
$40,720,009
2,616,910
2,041,874
39,245,144
2,688,631
21,621,135
1,787,766
1,917,063
Yen
U.S. dollars
$0.952
0.952
0.360
—
—
—
%
6.4%
9.7
6.9
1 The consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) from the year ended March 31, 2019 and also for the fiscal year ended March 31, 2018 as
comparative information.
2 R&D expenditures include elements spent on quality improvements which constitute manufacturing costs.
3 Diluted earnings per share attributable to Mitsubishi Electric Corp. stockholders is equal to Basic earnings per share attributable to Mitsubishi Electric Corp. stockholders, as no dilutive securities existed.
4 U.S. dollar amounts are translated from yen at the rate of ¥111= U.S.$1, the approximate rate on the Tokyo Foreign Exchange Market on March 31, 2019.
Revenue Breakdown by Business Segment
Others
Revenue
13.2%
676,736 million
Energy and Electric Systems 25.2%
Revenue 1,296,745 million
Home Appliances
20.9%
Revenue 1,074,044 million
Electronic Devices
Revenue
3.9%
199,908 million
Note: Inter-segment sales are included in the amounts of the diagram above.
Industrial Automation Systems 28.5%
Revenue 1,467,633 million
Information and
Communication Systems
Revenue
8.3%
426,269 million
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
03
Non-financial Highlights
Results of main initiatives in fiscal 2019
Reducing CO2 from Production
Contribution to Reducing CO2 from
Product Usage
We will push forward with reductions in CO2 from production(CO2 originating from energy),
as well as reducing non-CO2greenhouse gases (SF6, HFC, and PFC).
We will help reduce CO2 emissions through reducing the electricity consumed by custom-
ers during product use.
FY2021 target
Total emission of greenhouse gases from production (CO2 equiv-
alent) 1.47 million tons or less
FY2021 target
Reducing CO2 emissions from product usage
by an average of 35% compared to use in fiscal 2001
Results: FY2019
1.30 million tons
Results: FY2019
36% reduction
Effective Utilization of Resources
Reducing Resource Inputs
We will promote thorough waste separation, recycling, and greater efficiency of waste col-
lection and transport in order to reduce final waste disposal.
We will reduce the use of resources (resource inputs) as a measure towards creating a
recycling-based society.
FY2021 target
Final disposal rate in Japan Less than 0.1%
Final disposal rate overseas Less than 0.5%
FY2021 target
Reduce resource inputs by an average of
40% compared to fiscal 2001
Results: FY2019
Less than 0.1% for Mitsubishi Electric and
domestic affiliates 0.52% for overseas affiliates
Results: FY2019
45% reduction
Nature Conservation Activities
Product development that places
top priority on customer safety
We will continue to hold Mitsubishi Electric Outdoor Classrooms and proceed
with the “Satoyama” Woodland Preservation Project.
We will ensure safety through risk assessment and implement product develop-
ment that places top priority on customer safety.
FY2021 target
The cumulative number of participants in Mitsubishi Electric Outdoor
Classrooms and the “Satoyama” Woodland Preservation Project.
Risk assessments of target home electronic products
Results: FY2019
43,000 participants
Results: FY2019
Maintain 100% implementation
Promote human rights initiatives that are
based on international norms
We will identify and evaluate impacts on human rights across the Group.
Compliance training on a continuous basis
We provide compliance education that utilizes diverse methods, on a continuous
basis.
Human rights impact assessment
Mitsubishi Electric’s e-learning programs on compliance
Results: FY2019
Achieve a100% rate
of implementation by target companies
Results: FY2019
Maintained a 100% attendance rate
web
For results of fiscal 2019, please refer to the following:
https://www.MitsubishiElectric.com/en/sustainability/csr/management/management/materiality_progress/index.html
04 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
Initiatives / External Evaluation
Main initiatives and external evaluations related to ESG are as follows:
Initiatives
Participation in the UN Global Compact
In May 2018, the Mitsubishi Electric Group signed the UN Global Compact (UNGC) aimed at promoting CSR
activities based on international norms.
By signing the UNGC, the Group pledges to make continued efforts toward sustainable growth by complying
with the ten principles in the four areas of human rights, labor, environment and anti-corruption to the extent that
it can influence society. Efforts will be made to enhance the Group’s activities by maintaining close communica-
tion with UN organizations and relevant initiatives.
Expression of approval of the TCFD recommendations
The Mitsubishi Electric Group has expressed approval of the recommendations by TCFD (Task Force on Climate-
related Financial Disclosures).
External Evaluation
CDP
Mitsubishi Electric has received the highest rating from CDP.
- “A List” company for “Climate Change” and "Water Security“ for three consecutive years
- “Supplier Engagement Leader”
FTSE Index Series
FTSE Russell (UK) is a company that engages in the development of global investment indexes and the
provision of financial data to investors. Mitsubishi Electric was selected as a constituent of the company’s
FTSE4Good Index Series. Additionally, Mitsubishi Electric was selected as a constituent of the FTSE Blossom
Japan Index. The index has also been adopted as an investment outlet by the Government Pension Investment
Fund (GPIF).
MSCI Indexes
MSCI (USA) is a company that calculates and announces various indexes of global constituents. Mitsubishi
Electric was selected as a constituent of MSCI ESG Leaders Indexes. Mitsubishi Electric was selected as a
constituent for the MSCI Japan ESG Select Leaders Index, which consists of Japanese stock names ranked
according to their ESG (environment, social, governance) performance, and also for the MSCI Japan Empowering
Women Index (WIN), consisting of select companies in Japan displaying excellent gender diversity. The two
indexes have also been adopted as an investment outlet by GPIF.
* THE INCLUSION OF Mitsubishi Electric Corporation IN ANY MSCI INDEX, AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT
OR PROMOTION OF Mitsubishi Electric Corporation BY MSCI OR ANY OF ITS AFFILIATES. THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMES AND LOGOS ARE TRADEMARKS
OR SERVICE MARKS OF MSCI OR ITS AFFILIATES.
S&P/JPX Carbon Efficient Index
Mitsubishi Electric was selected as a constituent of the S&P/JPX Carbon Efficient Index designed to measure the
performance of companies by focusing on the level of carbon efficiency (carbon emissions per sales). The Index,
which is constructed by S&P Dow Jones Indices, is based on carbon emission data by Trucost, which assesses
risks relating to climate change, natural resource constraints, and broader environmental, social, and governance
factors. The index has also been adopted as an investment outlet by GPIF.
S&P/JPX Carbon Efficient Index
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
05
Initiatives to Create Value
The Mitsubishi Electric Group has taken on the challenge of resolving diversifying social challenges including environmental issues and resource and energy issues
through its products, systems and services. In doing so, it promotes initiatives to create values, such as simultaneous achievement of “sustainability,” and “safety, security,
and comfort.” In these ways, the Mitsubishi Electric Group pursues the sustainable growth of the entire Group.
—Co-creating the future—
06 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
Meanwhile, by pursuing sustainable growth of the Group through all its corporate activities including initiatives to create value, the Group will also contribute to achieving
the SDGs, common global goals.
—Co-creating the future—
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
07
Corporate Strategy
The Mitsubishi Electric Group has positioned corporate social responsibility (CSR)
as a pillar of its corporate management, based on its Corporate Mission and
Seven Guiding Principles. Accordingly, the Group has made committed efforts to
become a corporation whose actions are rated highly through its initiatives
toward solving social challenges. In other words, we aim to become a corporation
that is trusted by its stakeholders, including society, customers, shareholders, and
employees, and that earns their satisfaction through its business practices.
The Group has taken on the challenge of resolving diversifying social
challenges including environmental issues and resource and energy issues
through its products, systems and services. In doing so, it promotes initiatives to
create values, such as simultaneous achievement of “sustainability,” and “safety,
security, and comfort.” In these ways, the Mitsubishi Electric Group pursues the
sustainable growth of the entire Group.
《Strategy》
Mitsubishi Electric will provide integrated solutions to address diversifying social challenges, in the four fields of Life,
Industry, Infrastructure and Mobility, uniting all the capabilities inside and outside of the Group. For this purpose, we will
enhance our business foundation fostered over the past 100 years and further transform business models.
*Business foundation fostered over the past100 years: connection with customers, technologies, personnel, products, corporate culture,etc.
Corporate
Mission
The Mitsubishi Electric Group will continually improve its technologies
and services by applying creativity to all aspects of its business.
By doing so, we enhance the quality of life in our society.
Provide integrated solutions
uniting all the capabilities inside and outside of the Group
Initiatives to
Create Value
Transforming business models
Enhance the 100-year business foundation × Strengthen all forms of collaboration
= Evolution of Technology Synergies and Business Synergies
Social
Challenges
Mobility
Enrich leisure time
Life
Zero traffic accidents
Eliminate regional disparities
Comfortable life
Improve QOL* of mobility impaired people
Health
Comfortable transport
Eliminate traffic congestion
Reduce air pollution
Measures for deteriorating infrastructure
Build communities
Prevent global warming
Equal opportunity for education and training
Preserve the ecosystem
Avoid water shortage/ food shortage
Clean water
Prepare for natural disasters
Eliminate poverty/ inequalities
Industry and technological innovation
etc.
Address labor shortage
Response to uneven distribution and depletion of resources
Prepare for man-made threats
Infrastructure
Sustainable society
Industry
*QOL:Quality of Life
08 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
Mitsubishi Electric Group will contribute to meeting the SDGs' globally shared 17 goals by continuing to pursue sustainable
growth through all corporate activities, including value creation to solve social challenges
—Co-creating the future—
Factory
Automation
Home
Appliances
Power Devices
Contribute through value creation
Satellites
Power Systems
…
Surveillance
Control Systems
Facilities and Equipment
for Buildings
Automotive Equipment
Transportation Systems
Image Analyzing Solution
Contribute through all corporate activities
Recycling
(Home Appliances)
Strengthen Corporate
Governance and
Compliance on
a Continuous
Basis
Reduce Environmental
Burden During Production
Tree
Planting
Intuitively-interfaced
remote-control
…
Respect Human
Rights and Promote
the Active
Participation of
Diverse Human
Resources
Initiatives to Realize
an Inclusive Society
SOCIO-ROOTS
Fund
Further promote initiatives to create value, such as
simultaneous achievement of “sustainability”, and “safety, security, and comfort”
*SDGs :“Sustainable Development Goals” adopted by the United Nations as goals to achieve towards 2030
To ensure its corporate growth is sustainable, since fiscal 2002 the Group has adhered to the management policy of maintaining Balanced Corporate Management based
on three perspectives: growth, profitability and efficiency, and soundness. Through these perspectives it has striven to secure greater corporate value.
The Group is also committed to continuously enhancing its corporate governance and compliance systems.
Growth
• Sustainable growth through
providing solutions to social
challenges
• Technology Synergies/Business
Synergies
• Agile response to changes in
business environment
Greater
Corporate
Value
Profitability
Efficiency
• Enhance capital efficiency
• Increase utilization efficiency of
natural resources and energy
• Create a stronger business
foundation
Soundness
• Constantly review and refresh
business portfolio
• Maintain sound financial standing
• Strengthen corporate governance
and compliance on a continuous
basis
■ Pursue the Satisfaction of the Four Stakeholder
Categories
Social Contributions
Society
Increase Corporate Value
Shareholders
Excellent Products and Services
Customers
Rewarding Workplace
Employees
■ Strive for Continuous Innovation
Always improving.
Always delivering new value.
■ Toward a Higher Level of Growth
5 trillion JPY or more
8% or more
Growth Targets for FY2021
● Revenue
● OPM
Management Targets to be Continuously and Stably Achieved
● ROE
10% or more
● Debt Ratio 15% or less
*Debt Ratio represents ratio of Bonds and borrowings to total assets
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
09
Corporate Strategy
Toward “High-Quality” Growth
In line with its efforts to achieve a higher level of growth, the Mitsubishi Electric
Group has revised its Growth Targets for FY 2021 to consolidated revenue of
¥5 trillion or more, and an operating profit ratio of 8% or more. The Group will
work to continuously and stably achieve the following management targets:
secure an ROE of 10% or more, and secure a ratio of bonds and borrowings to
total assets of 15% on less.
In fiscal 2019, the Mitsubishi Electric Group achieved consolidated revenue
of ¥4,519.9 billion and operating profit ratio of 6.4%, achieving record highs
for consolidated revenue. In addition, the Group achieved ROE of 9.7% and a
ratio of bonds and borrowings to total assets of 6.9% as of March 31, 2019.
As slowdown in economic growth makes the business environment ever more
harsh, in FY2020, the Group will keep an eye on outcomes of past investments
as well as on the progress of profitability improvements, and continue with
initiatives to achieve Growth Targets for FY2021 and sustain growth into the
future.
Sustainable Growth through Providing Solutions
to Social Challenges
The Mitsubishi Electric Group’s distinctive strengths lie in the following three
areas: 1) A wide range of technological assets such as controls and power
electronics; 2) Activities in diverse businesses with different business features;
and 3) “Kaizen” (improvement) culture that has taken root in every field, includ-
ing production, quality management, sales, services, etc.
Fully utilizing these strengths, the Group has positioned the creation of value
toward providing solutions to challenges as the core of its growth strategies by
taking full advantage of Technology Synergies and Business Synergies, etc., in
the four fields with many social challenges.
Meanwhile, by pursuing sustainable growth of the Group through all its cor-
porate activities including initiatives to create value, the Group will also contrib-
ute to achieving the SDGs, common global goals.
The Four Fields
Having defined a social challenge category to which the Mitsubishi Electric
Group can contribute solutions by providing its products, systems, and services
as a “Field,” we will promote initiatives for value creation in the following four
fields where there are many social challenges: “Life” focusing on the daily lives
of people, “Industry” enabling creation of things necessary for life,
“Infrastructure” providing the foundation for society, and “Mobility” connecting
all of the fields above-mentioned. By identifying the challenges and needs of
society or each customer and continuing to pursue their satisfaction through
proposing and implementing solutions, the Group will secure sustainable
growth going forward.
Technology Synergies and Business Synergies
In promoting value creation, the Group will continue to strive to strengthen the
business foundation (connection with customers, technologies, personnel,
products, corporate culture, etc.) through operational improvement and trans-
formation in every site and further unite all the capabilities, from R&D to sales
and service, inside and outside of the Group, and thereby create Technology
Synergies through optimal combinations of its strong technological assets,
which encompass a wide range of technological fields, as well as Business
Synergies through the collaboration of its diverse business activities.
Furthermore, the Group will strive to improve customer satisfaction and
competitive advantages by always checking business models, as well as
reviewing and transforming models to the better from a viewpoint of whether
the Group is aware of changes in the business environment, sufficiently meet-
ing challenges and the needs of customers, and fully leveraging its advantages.
Achieving Balance between “Growth,” “Profitability/Efficiency,”
and “Soundness”
For ensuring its sustainable growth, the Mitsubishi Electric Group will continue
to allocate investment resources, including research and development and
capital, while actively pursuing collaborative ties and M&As to boost corporate
growth for the Group with the following three perspectives in mind: Supplement
missing parts (products and services/technology) essential for business expan-
sion; Secure distribution-/ service-network (supply chain) when entering new
regions/markets; and Acquire talent in order to strengthen business execution
capabilities. By doing this, the Group will maximize the outcome of its invest-
ment. At the same time, the Group will review and refresh its business portfolio
to reallocate its management resources to areas that show growth. Moreover,
the Group will strengthen this portfolio by continuously creating new business-
es capable of driving future growth.
10 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
Strength of the Mitsubishi
Electric Group
— A wide range of technological assets such as controls and power electronics
— Activities in diverse businesses with different business features
— “Kaizen” (improvement) culture taking root in every field, including production,
quality management, sales, services, etc.
Fully leverage our strength through all forms of collaboration inside and outside of the Group
Technological Assets
Value Creation
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Control(motion, heat, fluid, and electricity)
Power Electronics
Human Machine Interface
Encryption
Communication
Data Processing
Electromagnetic Analysis
Sensing
Design
Devices
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Technological Platform
R&D and IP
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Energy &
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Industrial
Automation Systems
Information &
Communication Systems
Electronic Devices
Home Appliances
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Technology Synergies:
Create value and strengthen
competitiveness of products/systems/services through
optimal combination of technological assets
Business Synergies:
Create additional value and competitiveness through
collaboration of a wide variety of businesses
（through combination of products/systems/services）
Procurement
Productivity
Quality
Sales
Services
Operating Platform
Strengthen
Collaboration
Corporations
Universities
Government
R&D Agency
Standardization Organizations …
Sustain growth into the future
Provide integrated solutions
uniting all the capabilities
inside and outside of the Group
Home Appliances
Energy & Electric Systems
Electronic Devices
Industrial Automation Systems
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m a d e w i t h S i C ,
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r e f o r m s a n d s t a b l e s u p p l y n e e d s
c o n d i
m o d e l s
S a f e t y a n d e f fi c i e n c y
G l o b a l
l d i n g S y s t e m s B u s i n e s s :
t y s y s t e m
S y s t e m s B u s i n e s s :
i c i
H i g h - v o l t a g e p o w e r e l e c t r o n i c s s y s t e m s
E l e c t
B u i
P o w e r D e v i c e b u s i n e s s : H i g h - p e r f o r m a n c e / L o w p o w e r l o s s S i / S i C - m o u n t e d d e v i c e s
P o w e r S y s t e m s B u s i n e s s :
T r a n s p o r t
E l e c t r i c p o w e r t r a i n s y s t e m s f o r E l e c t r i c V e h i c l e s ( N e x t g e n e r a t i o n S i / S i C )
Automotive Equipment Business: High efficiency equipment lineup
Factory Automation Systems Business: e-F@ctory
l
Autonomous driving related systems
e-F@ctory (Factory smartification)
Information & Communication Systems
Space Systems Business: Contribution for global social infrastructure
*ZEB:net Zero Energy Building, ZEH:net Zero Energy House, VPP:Virtual Power Plant, Si:Silicon, SiC:Silicon Carbide
Building Robust Business Structure
Striving for Continuous Innovation
To strengthen its business structure, the Mitsubishi Electric Group continuously
strives to improve its capital efficiency through management with awareness of
capital procurement cost. As a part of initiatives to this end, the Group contin-
ues to expand revenue and reduce costs while engaging in activities with the
aim of improving inventory turnover, trade receivables turnover, and Just in
Time operations. In addition to implementing these efforts in an exhaustive
manner, in fiscal 2016 the Group began utilizing an internal performance indi-
cator, ROIC (Mitsubishi Electric version) to monitor asset efficiency by business
segment, thereby improving the ROE of all Group operations.
Looking ahead, the Mitsubishi Electric Group will continue to focus on
generating stable cash flows while maintaining a well balanced approach in
securing funds for executing strategic growth investment and enhancing
shareholder returns in step with profit growth. In these ways, the Group will
diligently work to increase corporate value.
The Mitsubishi Electric Group will steadfastly carry out its management policies
guided by a commitment to Balanced Corporate Management, while putting
into practice the concept behind its overarching corporate statement: Changes
for the Better. Each and every employee will share the common goal of “Always
improving” and “Always delivering new value,” and the Mitsubishi Electric
Group—by continuing to undergo transformation itself—will mature into a cor-
poration that is always producing something better.
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
11
At a Glance
Energy and Electric Systems
Industrial Automation Systems
1,264
1,227
1,241
1,253
1,296
Revenue
Yen (billions)
1,500
1,228
1,200
900
600
300
0
1,321
1,310
1,444
1,444
1,467
Revenue
Yen (billions)
1,500
1,282
1,200
900
600
300
0
Information and
Communication Systems
Revenue
Yen (billions)
1,500
1,200
559
561
447
436
438
426
900
600
300
0
15
16
17
18
18
19
(Years ended March 31)
15
16
17
18
18
19
(Years ended March 31)
15
16
17
18
18
19
(Years ended March 31)
U.S. GAAP
IFRS
U.S. GAAP
IFRS
U.S. GAAP
IFRS
Operating profit
Yen (billions)
Operating profit
Yen (billions)
200
160
120
80
40
0
72
50
44
51
82
65
200
160
120
80
40
0
190
187
159
145
140
142
15
16
17
18
18
19
(Years ended March 31)
15
16
17
18
18
19
(Years ended March 31)
Operating profit
Yen (billions)
200
160
120
80
40
0
18
15
14
16
12
17
11
18
11
12
18
19
(Years ended March 31)
U.S. GAAP
IFRS
U.S. GAAP
IFRS
U.S. GAAP
IFRS
MAIN PRODUCTS AND BUSINESS LINES
MAIN PRODUCTS AND BUSINESS LINES
MAIN PRODUCTS AND BUSINESS LINES
Turbine generators, hydraulic turbine generators,
nuclear power plant equipment, motors,
transformers, power electronics equipment,
circuit breakers, gas insulated switchgears,
switch control devices, surveillance-system
control and security systems, transmission and
distribution ICT systems, large display devices,
electrical equipment for locomotives and rolling
stock, elevators, escalators, building security
systems, building management systems,
and others
Programmable logic controllers, inverters,
servomotors, human-machine interface, motors,
hoists, magnetic switches, no-fuse circuit
breakers, short-circuit breakers, transformers for
electricity distribution, time and power meters,
uninterruptible power supply, industrial fans,
computerized numerical controllers, electrical
discharge machines, laser processing machines,
industrial robots, clutches, automotive electrical
equipment, electric powertrain system, car
electronics and car mechatronics,
car multimedia, and others
Wireless and wired communications systems,
network camera systems, satellite
communications equipment, satellites, radar
equipment, antennas, missile systems, fire
control systems, broadcasting equipment, data
transmission devices, network security systems,
information systems equipment, systems
integration, and others
Fiscal 2019 Topics
In May Mitsubishi Electric launched iQ Edgecross, a software
suite targeted for use on industrial computers such as the
concurrently released MELIPC series. Once installed it
enhances the industrial computers control and edge com-
puting functions while also providing integration with the
Edgecross open software platform.
2018
Mitsubishi Electric’s room air conditioner, Kirigamine FL
series (launched in March 2016), won the Invention Award
of the 2018 National Invention Award hosted by Japan
Institute of Invention and Innovation for its design.
Mitsubishi Electric US, Inc., a wholly owned subsidiary of
Mitsubishi Electric, and Ingersoll-Rand in the U.S. estab-
lished a joint venture, Mitsubishi Electric Trane HVAC US
LLC, and started its operation in May. Mitsubishi Electric
US and Ingersoll Rand each have equal ownership of the
joint venture, which dis-
tributes ductless air
conditioner systems.
Mitsubishi Electric’s new production building for boosting
production of optical communication and wireless com-
munication equipment and network camera system was
completed in October in the premises of the company’s
Communication
Network Center,
Koriyama Plant in
Fukushima
Prefecture, Japan.
Plant No. 8 of the Hirohata Factory at Mitsubishi
Electric’s Himeji Works (Hyogo Prefecture, Japan) for
boosting pro-
duction of
motor genera-
tors and invert-
ers for HEV and
EV was com-
pleted in May.
Mitsubishi Electric was selected via its subsidiary
Mitsubishi Electric Asia (Thailand) Co., Ltd. to supply four
substations of Electric Power Generation
Enterprise (EPGE) in Myanmar with gas-in-
sulated switchgears (GIS), transformers
and other equipment including a special
divided three-phase transformer, which
can be packed in separate compact mod-
ules for easier shipping to locations,
12 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
Electronic Devices
Home Appliances
Revenue
Yen (billions)
1,500
1,200
900
600
300
0
238
211
186
202
202
199
Revenue
Yen (billions)
1,500
944
982
1,004
1,049
1,049
1,074
1,200
900
600
300
0
Others
Revenue
Yen (billions)
1,500
1,200
740
707
713
764
659
676
900
600
300
0
15
16
17
18
18
19
(Years ended March 31)
15
16
17
18
18
19
(Years ended March 31)
15
16
17
18
18
19
(Years ended March 31)
U.S. GAAP
IFRS
U.S. GAAP
IFRS
U.S. GAAP
IFRS
Operating profit
Yen (billions)
Operating profit
Yen (billions)
Operating profit
Yen (billions)
200
160
120
80
40
0
30
15
16
16
8
17
14
18
14
1
18
19
(Years ended March 31)
200
160
120
80
40
0
63
69
54
56
55
59
15
16
17
18
18
19
(Years ended March 31)
200
160
120
80
40
0
23
15
23
16
23
17
23
18
24
24
18
19
(Years ended March 31)
U.S. GAAP
IFRS
U.S. GAAP
IFRS
U.S. GAAP
IFRS
MAIN PRODUCTS AND BUSINESS LINES
MAIN PRODUCTS AND BUSINESS LINES
MAIN PRODUCTS AND BUSINESS LINES
Power modules, high-frequency devices,
optical devices, LCD devices, and others
Procurement, logistics, real estate, advertising,
finance, and other services
Room air conditioners, package air conditioners,
chillers, showcases, compressors, refrigeration
units, air-to-water heat pump boilers, ventilators,
photovoltaic systems, hot water supply systems,
IH cooking heaters, LED lamps, fluorescent
lamps, indoor lighting, LCD televisions,
refrigerators, electric fans, dehumidifiers,
air purifiers, cleaners, jar rice cookers, microwave
ovens, and others
Mitsubishi Electric was selected for the A-list of compa-
nies by CDP, an international NGO, in the “CDP Climate
Change” and “CDP Water” fields for the third consecutive
year. In addition, Mitsubishi Electric was selected as a
“Supplier Engagement leader.” Mitsubishi Electric has
thus been highly rated across a number of fields.
Mitsubishi Electric supplied the scoreboard at the
MAZDA Zoom-Zoom Stadium Hiroshima owned by
Hiroshima City with Diamond Vision™.
The Es'hail-2 communica-
tions satellite built by
Mitsubishi Electric was
launched successfully. The
company received the order
for the satellite from a Doha-
based Qatar government
satellite communication pro-
vider, Es'hailSat.
©SpaceX
"Es'hail-2" launch
2019
Mitsubishi Electric plans to build a test facility for its
technologies for net Zero Energy Buildings (ZEB) at its
Information Technology R&D Center in Kamakura,
Kanagawa
Prefecture, Japan.
The facility is
scheduled to start
operating in
2020.
Mitsubishi Electric opened the "TAKUMI" Inazawa
Installation Training Center for elevator and escalator
installation training for technicians from Japan and
abroad in April 2019. The facility, which is named after
the Japanese word for "great master," is
located on the premises of the Inazawa
Works, the company's mother factory for
the manufacture of elevators and escala-
tors, in Inazawa, Aichi Prefecture, Japan.
Mitsubishi Electric constructed a new plant to produce
motors and inverters for electric motor vehicles at
Mitsubishi Electric Automotive Czech s.r.o., its automotive
equipment and sales subsidiary in the Czech Republic.
The factory is scheduled to start operating in 2020.
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
13
Review of Operations
Energy and Electric Systems
Revenue Breakdown by Business Segment
25.2%
Revenue
¥1,296.7billion
up 3% year on year
Operating Profit
¥82.5billion
up ¥17.0 billion year on year
The social infrastructure systems business remained
Next-generation SiC Inverter for Railcars
Mitsubishi Electric has developed and provided a traction
inverter for railcars that incorporates silicon carbide (SiC),
a new type of semiconductor. This new inverter, with its
energy-efficient, compact, lightweight, low-maintenance,
and low-noise design, contributes to play a major role in
next-generation railcar propulsion systems.
Large-scale Visual Information System
Offerings in the Mitsubishi Electric Group’s lineup of
large-scale visual information systems boast Diamond
VisionTM—a technology that helps fuel audience excite-
ment in such venues as stadiums—along with cut-
ting-edge information distribution platforms that employ
the internet and data broadcasting. As such, the Group
provides visual information systems that enrich people’s
lives in various ways.
D-SMiree Smart Power Distribution Network
Systems for Medium or Low Voltage Direct Current
©CHIBA LOTTE MARINES
In response to growing calls for standalone power dis-
tribution structures in which individual buildings’ elec-
tricity needs are met by discrete on-site generation
facilities, Mitsubishi Electric has created the Energy
Management System (EMS), which is specifically
designed for direct current distribution. Boasting predic-
tive functions covering both generator output and elec-
tricity demand, the EMS helps control charging and discharging schedules to best utilize direct
current generated by photovoltaic generators as well as that released from batteries, thus eliminat-
ing energy loss attributable to conversion to alternating current.
substantially unchanged in orders compared to the
Power Plants
previous fiscal year, while revenue increased
compared to the previous fiscal year due primarily
to increases in the transportation systems business
inside and outside Japan and the power systems
business in Japan.
The building systems business remained
substantially unchanged in both orders and revenue
compared to the previous fiscal year, experiencing
a decrease in the new installation of elevators and
escalators in China and buoyant growth in the
renewal business in Japan and other factors.
As a result, revenue for this segment increased by
3% from the previous fiscal year to 1,296.7 billion
yen. Operating profit increased by 17.0 billion yen
from the previous fiscal year to 82.5 billion yen due
primarily to an increase in revenue.
Mitsubishi Electric provides power system equipment for
various power plants, which play a major role in power
supply and are required to further reduce environmental
impact. With high efficiency turbine generators and instru-
mentation control systems that combine advanced network
and measurement technologies, Mitsubishi Electric power
plants realize improved reliability and cost efficiency.
NEXIEZ Machine-room-less Elevators
Compact, lightweight, and energy-saving, NEXIEZ
machine-room-less elevators are the global flagship
product. They are widely used throughout the world,
mainly in low- to mid-rise buildings. Models designed
with various functions and features for specific regions
are also available to meet the preferences and custom-
er needs of each region.
Series Z Escalators
The Z-Series escalators offer enhanced safety through
several features that ease stepping on/off and help pre-
vent clothing from getting caught, so that passengers of
all ages, from small children to the elderly, can use the
escalators safely. They also offer a higher level of ener-
gy conservation by providing optional features such as
VVVF inverters. Environmentally friendly, people-friendly,
and beautiful, the Z-Series show the future of escala-
tors.
14 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
Industrial Automation Systems
Revenue Breakdown by Business Segment
28.5%
Revenue
¥1,467.6billion
up 2% year on year
Operating Profit
¥142.5billion
down ¥44.7 billion year on year
The factory automation systems business saw
decreases in both orders and revenue from 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 revenue from the previous fiscal
year due primarily to increases in Japan, Europe and
other markets in Asia, as well as increased revenue
in electric-vehicle related equipment in response to
market growth worldwide.
As a result, revenue for this segment increased by
2% from the previous fiscal year to 1,467.6 billion
yen. Operating profit decreased by 44.7 billion yen
from the previous fiscal year to 142.5 billion yen due
primarily to a shift in product mix,increases in
material prices and upfront investment for growth
drivers.
Programmable Logic Controllers
Mitsubishi Electric’s MELSEC series of programmable
logic controllers supports a wide array of production
and social infrastructure applications; solutions range
from control and safety devices to information and
instrumentation management. As a leading global
brand, the MELSEC series contributes to the construc-
tion of cutting-edge control systems owing to its capa-
bilities, performance, product variety, and high reliability.
AC Servos
The MELSERVO Series enhance all aspects of produc-
tion devices and facilities. From rotary servo motors to
linear servo motors and direct drive motors, a wide
range of products is available to meet any number of
applications and to significantly improve the perfor-
mance of all relevant devices.
Computerized Numerical Controllers—CNCs
A broad range of CNCs is available. Including, for exam-
ple, the M800/80 Series, which increases productivity
and precision and optimizes machine tool operation
through an independently developed dedicated CPU and
abundant control functions.It is also compatible with the
various field networks that are necessary for construct-
ing automation systems.
Electrical Discharge Machines (EDMs)
Beginning with the newly launched MP series, a strate-
gic product on a global scale, Mitsubishi Electric pro-
vides a lineup of EDMs that add value and improve the
manufacturing productivity of molds and precision com-
ponents. Such equipment is indispensable to the pro-
duction of automobiles, home electronics, and IT-related
devices.
Electric Power Steering
(Motors and Controllers)
Mitsubishi Electric was the first company in the world to
mass produce motors and controllers for electric power
steering to assist driver steering in line with driving con-
ditions. Over the years, Mitsubishi Electric has helped to
improve steering feel, response, and stability while
delivering compact units and high-output performance,
and contributing to reduced automobile CO2 emissions.
Car Navigation System
The DIATONE SOUND. NAVI car audio-navigation system
eliminates the slight noise generated by audio devices
and transmits sounds in full detail. In addition, it pro-
vides high-speed multi-task processing, fast respon-
siveness when searching and scrolling and beautiful
images on the map screen and in video playback.
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
15
Review of Operations
Information and Communication Systems
Information System Integrated Control
Center
Specialist engineers are available 24/7 to remotely
operate and monitor client information systems and to
analyze and determine any problem that might occur
using automated tools, enabling a rapid response to
any system malfunction.
(Mitsubishi Electric Information Network Corporation)
“kizkia”: Video Analysis Solution using
Artificial Intelligence
Powered by AI, this system can identify attributes of
persons or things and automatically recognize their
movements, conditions and situations by analyzing
security footage in real-time. It notifies irregular situa-
tions which may require staff’s support but would oth-
erwise been overlooked by human observers. The
system also makes it possible to support forecasting
future conditions.
(Mitsubishi Electric Information Systems Corporation)
DS2000 Standard Satellite Platform
The DS2000 is a standard satellite platform modeled
after JAXA’s ETS-VIII. It meets the need for high-quali-
ty, low-cost satellites with shortened delivery times. It
has already been adopted for use by Japan and other
countries; more than ten satellites currently in orbit use
it. It will eventually be incorporated into JAXA’s
Engineering Test Satellite 9, which is being launched in
response to the need for high-throughput communica-
tions satellites.
Vehicle-mounted Stations for Satellite
Communications
Vehicle-mounted satellite communication equipment
enables transmission of video and audio for broadcast
news (satellite news gathering) and information for
disaster management. Mitsubishi Electric products are
employed by Japanese broadcasters, the public sector,
and infrastructure companies such as gas and elec-
tricity utilities.
Broadband Optical Access Systems
Mitsubishi Electric is progressively installing Gigabit
Ethernet Passive Optical Network (GE-PON) systems,
which play a central role in broadband services. The
need for GE-PON systems is steadily expanding due to
high-capacity broadband content, including the
increased use of visual services.
Network Camera System
This Network Camera System meets the expanding
range of needs for video surveillance systems, which is
achieved through new digital technology incorporated
into its high-resolution megapixel camera and its high
level of scalability, which can accommodate even
large-scale systems.
Revenue Breakdown by Business Segment
8.3%
Revenue
Operating Profit
¥426.2billion
down 3% year on year
¥12.2billion
up ¥0.9 billion year on year
The telecommunications systems business saw
decreases in both orders and revenue compared to
the previous fiscal year due primarily to decreased
demand in communications infrastructure
equipment.
The information systems and service business
remained substantially unchanged in orders, while
revenue increased compared to the previous fiscal
year owing to an increase in the system integrations
business.
The electronic systems business saw a decrease
in orders compared to the previous fiscal year mainly
due to a decrease in the space systems business,
while revenue experienced a decrease compared to
the previous fiscal year due primarily to a decrease
in the defense systems business.
As a result, revenue for this segment decreased
by 3% from the previous fiscal year to 426.2 billion
yen. Operating profit increased by 0.9 billion yen
from the previous fiscal year to 12.2 billion yen due
primarily to a shift in project portfolios.
16 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
Electronic Devices
Revenue Breakdown by Business Segment
3.9%
Revenue
Operating Profit
¥199.9billion
down 1% year on year
¥1.4billion
down ¥12.7 billion year on year
The electronic devices business saw a decrease in
orders and revenue fell by 1% from the previous
fiscal year to 199.9 billion yen mainly due to
decreased demand for optical communication
devices.
Operating profit decreased by 12.7 billion yen
from the previous fiscal year to 1.4 billion yen due
primarily to a decrease in revenue and a shift in
product mix.
1200V SiC*1-SBD*2
By utilizing SiC, power loss is significantly reduced compared
to Si (silicon). It achieves high-speed switching and downsizing
of peripheral components, such as reactors, and will be instru-
mental in reducing power loss and downsizing for the power
supply systems for infrastructure, photovoltaic power systems
and charging equipment for electric vehicles.
*1 SiC: Silicon Carbide
*2 SBD: Schottky Barrier Diode
MISOP™ Surface-Mount Package IPM* Series
Downsizing, design simplification, and design flexibility of invert-
er systems of equipment such as fan motors of air conditioners
are improved by utilizing a surface-mount package that allows
reflow soldering, and by implementing optimized terminal layout
and various ICs with protection functions.
*IPM: Intelligent Power Module
GaN*1 High Frequency Devices
for Satellite Earth Stations
These power amplifier GaN high frequency devices are suitable
for satellite communication system earth stations, which are
used for high-speed communication during natural disasters and
in areas where ground networks are difficult to construct. This
lineup of industry top-level*2 output power products will answer
various needs related to satellite earth stations.
*1 GaN: Gallium Nitride
*2 Based on Mitsubishi Electric research as of September 27, 2016; com-
pared with Ku-band GaN HEMT devices for use in satellite earth stations
25 Gbps EML*1 CAN*2 for 5G Mobile Base Stations
This is a high-speed optical data transmission device for radio
access networks within fifth-generation (5G) mobile base stations.
With 25 Gbps transmission speed, higher data volumes for mobile
communication systems and a 40% reduction in power consump-
tion are achieved, contributing to mobile communications systems
with low power consumption.
*1 EML: Electro-absorption Modulator Laser
*2 CAN (TO-CAN): Package with excellent productivity (for mass production) that is
widely used in optical data transmission devices
TFT LCD Modules with Touch Panels for Industrial
Use(7.0-inch WXGA,10.4-inch SVGA,15.0-inch XGA)
TFT-modules with projected capacitive touch panels using cover
glass of up to 5 mm thick, support maximum ten-point multi-
touch operation, and can be used even when using with thick,
heat resistant gloves or when the screen is wet. They are ideal
for outdoor applications that require impact resistance and water
spill compatibility.
Established Mass-Production Technology for Curved
Color TFT-LCD Module and Began Taking Orders
Mitsubishi Electric has established mass-production technology
for a new curved (concave) color TFT-LCD module that combines
environmental ruggedness to withstand extreme temperatures
and an attractive design, making it ideal for use in automobiles
and boats. The module offers a curvature radius* from 700 mm
to less than 1,000 mm and optical performance equivalent to
that of flat screens. Mitsubishi Electric has started accepting
orders for the new module.
* Value of the radius of the curve if the curvature arc extended to a circle. The
smaller the value, the higher the curvature.
7.0-inch WXGA
Curvature radius:
800 mm
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
17
Review of Operations
Home Appliances
Revenue Breakdown by Business Segment
20.9%
Revenue
¥1,074.0billion
up 2% year on year
Operating Profit
¥59.4billion
up ¥3.9 billion year on year
The home appliances business saw a 2% increase in
revenue from the previous fiscal year to 1,074.0
billion yen due to increases in revenue of air
conditioners for Japan, Europe and North America.
Operating profit increased by 3.9 billion yen
compared to the previous fiscal year to 59.4 billion
yen due primarily to an increase in revenue.
18 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
Air Conditioning Systems
In addition to KIRIGAMINE room air conditioners,
Mitsubishi Electric offers an extensive lineup of prod-
ucts with applications extending from stores, offices,
and buildings to factories and industrial facilities while
featuring environmentally compatible, energy-saving
technologies. These qualities allow Mitsubishi Electric
to meet air conditioning needs globally.
Home Equipment
Electricity generated by solar panels is charged in the
batteries of electric vehicles, leveraging the use of
renewable energy. Mitsubishi Electric offers ener-
gy-saving home environments using highly efficient air
conditioners and ventilation, water heaters and cooking
equipment. Create a comfortable living environment for
the whole family.
Home Appliances
Mitsubishi Electric develops home appliances by incor-
porating its unique technologies and perspectives so
that its products can be used in various scenes of daily
life, such as the kitchen, living room, and bedroom.
Efforts are made to develop products that contribute to
making life more comfortable for users, meeting and
even surpassing their expectations.
Lighting Fixtures and Light Bulbs
Mitsubishi Electric offers an extensive lineup of
high-efficiency, long-lasting LED products that meet
diverse needs for energy-saving light bulbs and equip-
ment in households, stores, offices, and factories. The
company’s LED products make the future brighter for
families and society as a whole.
Visual Equipment for Public
and Business Applications
Mitsubishi Electric’s high-quality image processing
technologies deliver exceptionally sharp images with
superior color reproduction and are incorporated in a
wide range of products developed to suit a variety of
application needs. These systems are being used in
Japan and abroad for large-screen applications, such
as digital signage used to display images, data, and
information at public facilities and other venues.
Recycling Consumer Electronics
and Home Appliances
Mitsubishi Electric has developed technologies for
automatically sorting the three major types of plastic
(polypropylene (PP), polystyrene (PS), and acryloni-
trile-butadiene-styrene (ABS)) used in consumer elec-
tronics and home appliances. This original recycling
system is being utilized to promote the reuse of plas-
tics in the company’s products by improving the physi-
cal properties of the sorted materials.
Customers
Consumer electronics
and home appliances
Used products
Mitsubishi Electric Corporation
Hyper Cycle Systems Corporation
Materials
manufacturers
Metals and glass
Original
recycling system
Simple
plastics
Plastic
PP, PS, ABS
Mixed plastics
Green Cycle Systems Corporation
Research and Development
Research and Development
As the cornerstone of its growth strategy, the Mitsubishi
Electric Group will promote short-, medium-, and long-term
R&D themes in a balanced manner.
In addition to promoting development toward strengthening
current businesses and achieving innovation, the Company is
striving to create further value through synergy of technologies
and businesses by leveraging the Company’s diverse technolo-
gies and businesses, while also working to realize sustainable
growth through the development of future technologies.
To support these efforts, the Company is developing com-
mon basic technologies that are the source of the competitive
advantages of the Company’s products, on a continuous basis.
Furthermore, the Company will promote enhancement of
efficiency of development through proactive utilization of open
innovation in collaboration with universities and other external
R&D institutions.
During fiscal 2019, the total R&D expenses for the entire
Group have amounted to 212.7 billion yen (1% increase
compared to the previous fiscal year). Representative
achievements are as follows.
R&D policy
Well balanced short-, mid- and long-term R&D
External
technologies/entities
Open Innovation
Realizing sustainable growth through
the development of future technologies
Backcasting
Future society
—Co-creating the future—
—Co-creating the future—
Creating further value through synergy of
technologies and businesses
Promoting development toward
strengthening current businesses
and achieving innovation
Short-
term
Mid-
term
(4Ys-)
Long-
term
(10Ys-)
Developing common basic technologies that are the source
of competitive advantages, on a continuous basis
Society 5.0: It is contained in the 5th Science and Technology Basic Plan approved by the Government of Japan in Jan. 2016.
SDGs: “Sustainable Development Goals” adopted by the United Nations as goals to achieve towards 2030
Main R&D Achievements in Fiscal 2019 (consolidated results)
Development of New Dot Forming Technology that Achieves
High-precision Three-dimensional Metal Shaping
In recent years, there has been a growing demand for multi-product small-lot
production. In order to shorten manufacturing processes and increase design
flexibility, application of three-dimensional shaping technologies to metal parts
have been spreading in various fields, primarily in the aircraft and automobile
manufacturing fields.
The Company has developed a unique dot forming technology that realizes
high-precision shaping by combining laser, computer numerical control and
computer aided manufacturing CAM*1 technologies in 3D printers. The technolo-
gy produces high-quality three-dimensional parts with few voids at high speed,
employing a laser wire DED*2 method. With this new technology, the shape
accuracy has improved by 60% (in-house comparison) compared to that of
conventional consecutive forming technology.
The technology will contribute to greater productivity in a wide range of
applications, such as the “near-net” shaping*3 of aircraft and automobile
parts and build-up repairs.
*1 Computer Aided Manufacturing: A technology that uses input three-dimensional shape data to perform
all production preparations, such as the creation of processing programs, on a computer
*2 Directed Energy Deposition: An additive-manufacturing process that uses focused thermal energy to
fuse materials as they are deposited, and add layer by layer to solidify
*3 A manufacturing technique to produce the item in near-final form
Laser Wire DED Type Metal 3D Printer
Laser
oscillator
Gas nozzle
Laser
Wire
Consecutive forming
(conventional)
Dot forming (new)
The shape accuracy of cylindrically
shaped items is increased by 60%
Development of Seamless Speech Recognition Technology
Using its proprietary Maisart*1 AI technology, the Company developed “Seamless
Speech Recognition,” the world’s first*2 technology capable of highly accurate
multilingual speech recognition without being informed which language is being
spoken. The technology can understand multiple people speaking either the same
or different languages simultaneously.
Going forward, the Company will work to further improve the accuracy and
applicability of automatic speech recognition in real environments.
*1 Mitsubishi Electric’s AI creates the State-of-the-ART in technology
Mitsubishi Electric’s AI technology brand aimed at making every device smarter
*2 As of February 13, 2019 (based on the Company’s research)
Seamless Multilingual Speech Recognition
End-to-End
neural network
distinguishes
languages and
recognizes
the meaning
of what is spoken
Speaking in native
languages without
prior language setting
Image of the Seamless Speech
Recognition Technology
こんにちは
Hello
Guten Tag
你好
Hola
Bonjour
Buon pomeriggio
…
…
…
More than 10
languages
are recognized with
high accuracy
Voice recognition is possible even in situations
where it is not known what languages will be spoken
by an indefinite large number of users
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
19
businesses (in 2018) announced by the World Intellectual Property
Organization (WIPO).
In conjunction with creating a patent network, we are also actively pursuing
activities toward acquiring design rights in Japan and overseas, to protect both
the functional and design aspects of our technologies.
Annual Trends in Overseas Patent Applications
by the Mitsubishi Electric*1
(Number of Applications)
6,000
5,000
4,000
3,000
2,000
1,000
0
2016
2017
2018
2019
(FY)
■■ USA
■■ Europe
■■ China
■■ Others
*1 Starting in FY2019, we began using the number of overseas patent applications of
Mitsubishi Electric as a single entity.
Respecting IP Rights
The Mitsubishi Electric Group firmly recognizes the importance of mutually
acknowledging and respecting not only its own intellectual property rights but
the intellectual property rights of others as well. This stance is clearly set forth
in the Mitsubishi Electric Group Conduct Guidelines and practiced throughout
the Group.
Any infringements on the IP rights of others not only violate the Code of
Corporate Ethics and Compliance, but also have the potential to significantly
impair the Group's continued viability as a going concern. The resulting poten-
tial impairments include being obliged to pay significant licensing fees or being
forced to discontinue the manufacture of a certain product.
In order to prevent any infringement on the IP rights of others, various edu-
cational measures are provided mainly to engineers and IP officers, to raise
employee awareness and promote greater respect for the IP rights of others. At
the same time, a set of rules has been put in place to ensure that a survey of
the patent rights of others is carried out at every stage from development to
production, and is strictly enforced throughout the entire Group.
The Mitsubishi Electric Group also works diligently to prevent any infringe-
ment on its IP rights by others. In addition to in-house activities, we place par-
ticular weight on collaborating with industry organizations while approaching
government agencies both in Japan and overseas as a part of a wide range of
measures to prevent the counterfeiting of our products.
Intellectual Property
Protection of Intellectual Property Rights
Basic Policy
The proper protection of intellectual property (IP) rights promotes technological
progress and sound competition, and also contributes to realizing affluent life-
styles and the development of society.
The Mitsubishi Electric Group recognizes that intellectual property (IP) rights
represent a vital management resource essential to its future and must be pro-
tected. Through integrating business, R&D, and IP activities, the Group is pro-
actively strengthening its global IP assets, which are closely linked to the
Group's business growth strategies and contribute to both business and soci-
ety, and also working on protecting IP rights.
Structure of the Intellectual Property Division
The IP divisions of the Mitsubishi Electric Group include the Head Office IP
Division, which is the direct responsibility of the president, and the IP divisions
at the Works, R&D centers, and affiliated companies. The activities of each IP
division are carried out under the executive officer in charge of IP at each loca-
tion. The Head Office IP Division formulates strategies for the entire Group, pro-
motes critical projects, coordinates interaction with external agencies including
patent offices, and is in charge of IP public relations activities. At the Works,
R&D center, and affiliated company level, IP divisions promote individual strate-
gies in line with the Group's overall IP strategies. Through mutual collaboration,
these divisions work to link and fuse their activities in an effort to develop more
effective initiatives.
Integrating Business, R&D and IP Activities
Integration
IP Network
IP/Standardization Strategy
IP Division at Headquarters
Business Strategy
IP Departments
Business Groups, Facilities, Affiliates
Development Strategy
R&D Centers
IP Departments
Global IP Strategy
The Mitsubishi Electric Group identifies critical IP-related themes based on its
mainstay businesses and important R&D projects, and is accelerating the glo-
balization of IP activities also by filing patents prior to undertaking business
development in emerging countries where an expansion of business opportuni-
ties is expected. Furthermore, resident officers are assigned to Mitsubishi
Electric sites in the United States, Europe, China, and Southeast Asia to take
charge of IP activities and strengthen the IP capabilities of business offices,
R&D centers, and affiliated companies in each country. Through these initia-
tives, we strive to create a robust global patent network.
As an indication of the Mitsubishi Electric Group's IP capability and global IP
activities, the company ranked No.1 in Japan in terms of the number of patent
registrations (in 2018) announced by the Japan Patent Office (JPO), and No.2
in the world in terms of Patent Cooperation Treaty (PCT) applications by
20 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
CSR at Mitsubishi Electric Group
CSR Management
Principles of CSR
The Mitsubishi Electric Group regards its corporate social responsibility (CSR) initiatives as the foundation of its corporate management, and upholds its Corporate
Mission and Seven Guiding Principles as the basic policies of its CSR. Particularly with respect to initiatives related to ethics and legal compliance, Group-wide efforts
are made to enforce measures such as enhancing training and strengthening internal controls. Active measures are also taken to ensure and improve quality assur-
ance, environmental preservation activities, philanthropic activities, and communication with stakeholders.
Mitsubishi Electric Group's stakeholders
To achieve sustainable growth, the Mitsubishi Electric Group must maintain communication with its various stakeholders. We have a corporate social responsibility to
reflect the expectations, requests, and opinions of each stakeholder in our corporate activities, and to increase our positive impact on society while reducing any nega-
tive impact.
To help maintain communication with stakeholders, we have established "Four Satisfactions" as a management policy, with the aim of satisfying all of our stakehold-
ers, including society, customers, shareholders, and employees.
Stakeholders of the Mitsubishi Electric Group
Pursue the Satisfaction of the Four Stakeholder Categories
Promotional System for CSR
The policies and planning for the CSR activities of the Mitsubishi Electric Group
are decided by a CSR Committee appointed by Mitsubishi Electric’s executive
officers. The Committee is composed of the heads of Mitsubishi Electric’s man-
agement departments (19 members in charge of environmental, social and gov-
Main agenda of the CSR Committee (held in April 2019)
• Report on achievements made in the previous fiscal year and activities
planned in the current fiscal year
• Response to the sustainable development goals (SDGs)
• Further enhancement of information disclosure by taking into account
ernance aspects from divisions such as Corporate Strategic Planning and
ESG (environment, social, governance) investment
Corporate Human Resources), and discusses the results of activities performed
• Human rights initiatives
during the previous fiscal year, decisions on future activity plans, and responses
• Supply chain management
to law amendments, from a perspective that spans the entire Mitsubishi Electric
• Long-term environmental vision
Group.
Knowing that CSR activities are directly linked to corporate management,
each department responsible for ethics and legal compliance, quality assurance
and improvement, environmental conservation and philanthropy activities, and
communication with stakeholders implements their own initiatives, based on the
CSR policy of the Mitsubishi Electric Group.
In addition to the CSR Committee that is generally held once a year, various
activities are also promoted and implemented in communication with the CSR
Expert Committee and CSR Business Promotion Committee, which are con-
vened as a forum for sharing and executing the policies and plans established
by the CSR Committee.
CSR Promotion System
CSR Committee
Chairman: Director in charge of CSR
Director-general: General Manager
of the Corporate Administration Div.
Corporate
Administration Div.
CSR Promotion Center
CSR Expert
Committee
CSR Business
Promotion Committee
Departments
Affiliates in Japan
Overseas Affiliates
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
21
CSR at Mitsubishi Electric Group
CSR Materiality and SDGs Management
CSR Materiality
Considering requests from the Global Reporting
Initiative (GRI)*, social trends and the business envi-
ronment, in fiscal 2016 the Mitsubishi Electric Group
identified CSR materiality and targets / Key
Performance Indicators (KPI) to fulfill the materiality
towards realizing the further integration of CSR with
management and the long-term advancement of
CSR initiatives.
We will implement activities to continuously
improve our performance related to CSR
materiality and targets / Key Performance
Indicators (KPI) based on the PDCA (Plan-Do-
Check-Action) Cycle approach.
* An international body that proposes shared global guidelines for
corporate sustainability reporting
Initiatives to Address the SDGs
The Mitsubishi Electric Group, which is committed
to enhancing the quality of life in our society, as
stated in our corporate mission, will contribute to
accomplishing the 17 goals of the SDGs, through
the Group's diverse businesses as well as all
corporate activities related to the environment,
society and governance (ESG), for solving
challenges in society.
In fiscal 2019, we decided on goals that we
would address on a priority basis to further contrib-
ute to the SDGs.
• Goal 7: Affordable and Clean Energy
• Goal 11: Sustainable Cities and Communities
• Goal 13: Climate Action
By further promoting initiatives to create value
for these goals to which we can contribute signifi-
cantly as a comprehensive electrical and electron-
ics manufacturer, we will make a specific
contribution to achieving the SDGs.
In doing this, the Mitsubishi Electric Group will
integrate the concept of the SDGs into its manage-
ment strategy and contribute to the SDGs that we
will prioritize through the CSR materiality initiatives
of "Realize a Sustainable Society," and "Provide
Safety, Security, and Comfort."
22 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
CSR Materiality and SDGs
G: Governance
Corporate Governance
Basic Corporate Governance Policy
While maintaining the flexibility of its operations and promoting management
transparency, Mitsubishi Electric, as a Company with Three-committee System,
works to strengthen the supervisory functions of management with the goal of
realizing sustained growth. Our fundamental policy is to build and improve a cor-
porate structure that is more able to meet the expectations of society, customers,
shareholders, employees and all of its stakeholders while endeavoring to further
increase corporate value.
web
For the IR Library, please refer to the following:
https://www.MitsubishiElectric.com/en/investors/library/index.html
Corporate Management and Governance Structure
Corporate Management Structure
In June 2003, Mitsubishi Electric became a Company with Three-committee
System. Key to this structure is the separation of supervisory and executive func-
tions; the Board of Directors plays a supervisory decision-making role and
Executive Officers handle the day-to-day running of the Company.
A salient characteristic of Mitsubishi Electric’s management structure is that
the roles of Chairman of the Board, who heads the supervisory function, and the
President & CEO, who is head of all Executive Officers, are clearly separated.
Additionally, neither is included among the members of the Nomination and
Compensation Committees. The clear division of supervisory and executive func-
tions allows the Company to ensure effective corporate governance.
The present Board of Directors is comprised of twelve members (five of whom
are Outside Directors, one of whom is a woman), who objectively supervise and
advise the Company’s management by executing their duties based on the objec-
tives and authority of the Companies Act, as well as by delegating to Executive
Officers the decision authority for executing all operations, except the matters
listed in the items of paragraphs 1 and 4 of Article 416 of the Companies Act.
The Board of Directors has three internal bodies: the Nomination, Audit and
Compensation Committees. Each body has five members, the majority of whom
are Outside Directors, who are chosen by the Board of Directors taking into
account the experience and specialties of each person. Each Committee under-
takes its duties based on the objectives and authority of the Companies Act.
The bureaus have been established for the Board of Directors and each of the
Committees to support directors. The Audit Committee is supported by dedicated
independent staff.
Executive Officers make decisions about the execution of operations on mat-
ters delegated by the Board of Directors within the range of duties allocated to
each Executive Officer based on the objectives and authority of the Companies
Act, and then execute such operations. Important items among such matters del-
egated by the Board of Directors are deliberated and decided upon in Executive
Officers’ meetings attended by all Executive Officers.
Internal Control System
(1) For the execution of the duties of the Audit Committee, its independence is
secured by assigning employees whose job is exclusively to assist the Audit
Committee members. In addition, internal regulations regarding the processing of
expenses and debts incurred in the execution of the duties of the Audit
Committee members are established and such expenses and debts are properly
processed.
A system for reporting to the Audit Committee is developed to report
information about the Company and its subsidiaries to the Audit Committee via
the divisions in charge of internal control, and an internal whistle-blower system
is developed and its details are reported to the Audit Committee members.
Furthermore, the Audit Committee members attend important meetings
including Executive Officer meetings and conduct investigations such as inter-
views with Executive Officer and the executives of the Company’s offices and
subsidiaries, and undertake deliberations to determine audit policies, methods,
implementation status, and results of the audit by regularly receiving reports from
the Independent Auditor and Executive Officers in charge of audits.
(2) Internal regulations and systems to ensure the properness of operations within
the Mitsubishi Electric Group are established. Executive Officers take responsibili-
ty for constructing such systems within the areas over which they are appointed.
Important matters are deliberated by convening Executive Officer meetings.
Executive Officers regularly monitor the status of management of the
systems. The divisions in charge of internal control monitor the status of design
Corporate Governance Framework
Decision Making and Execution
Executive Officers
President & CEO
Executive Vice President
Senior Vice Presidents
Executive Officers
Business/Administration Divisions
Report
General Shareholders’ Meeting
Report
Appointment
Appointment/Dismissal/Supervision/Delegating
the decision authority for executing all operations
Report
Supervision
Board of Directors
Chairman
s
r
o
t
c
e
r
i
D
Nomination Committee
Outside Directors (majority)
Audit Committee
Outside Directors (majority)
Compensation Committee
Outside Directors (majority)
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
23
CSR at Mitsubishi Electric Group
and management of internal control system and regulations. Also an internal
whistle-blower system is established and the matters reported thereto are
informed to the Audit Committee members.
Furthermore, the status of management of the system is audited by internal
auditors, and the audit results are reported regularly to the Audit Committee via
Executive Officers in charge of audit.
- Audit Committee
The Audit Committee is made up of five directors, three of whom are outside
directors. In accordance with the policies and assignments agreed upon by the
Committee, committee members- mainly those from the Audit Committee
responsible for investigation- attend Executive Officers’ meetings and other such
important conferences, and conduct hearings and surveys of Executive Officers
and the executive staff of Mitsubishi Electric offices and affiliated companies.
Divisions in charge of internal control including the Corporate Auditing Division,
through a responsible Executive Officer, submit reports to the Audit Committee,
which holds periodic report meetings to exchange information and discuss poli-
cies. In addition, the Audit Committee discusses policies and methods of auditing
with accounting auditors, who furnish it with reports on the status and results of
the audits of the Company that they themselves conduct.
Akihiro Matsuyama, Chairman of the Audit Committee, and Masahiko Sagawa,
a member of the Audit Committee, have long years of experience in the account-
ing and financial operations of the Company. Kazunori Watanabe, a member of
the Audit Committee, is a Certified Public Accountant and has a considerable
degree of knowledge about finance and accounting.
- Status of Internal Audit
Internal audit is intended to contribute to the sound management and strength-
ened management structure of Mitsubishi Electric and its affiliated companies in
Japan and overseas by improving management efficiency, strengthening risk
management, thoroughly observing the code of corporate ethics and ensuring
compliance, and enhancing internal control.
With approximately 40 members acting independently, Mitsubishi Electric’s
Corporate Auditing Division conducts internal audits of the Company from a fair
and impartial standpoint. In addition, the division’s activities are supported by
auditors with extensive knowledge of their particular fields, assigned from rele-
vant business units. Through an Executive Officer in charge of auditing, the
Corporate Auditing Division regularly reports the results of such audits to the
Audit Committee.
Providing Directors with Appropriate Information
at the Appropriate Time, and Conducting Reviews
of the Board with Analyses and Evaluations
To strengthen the Board’s capacity to supervise Company’s management, the
bureaus of the Board of Directors and each committee provide the directors with
the information necessary for supervising management, in a timely and appropri-
ate manner. And, to further improve the Board of Directors’ capacity to supervise
management, venues have been established for supplying information to and
exchanging views with Outside Directors, and the Company is working to further
enhance the provision of management-related information to the Board of
Directors itself.
Additionally, in order to further enhance the functioning of the Board of
Directors, the Board meetings are reviewed on an annual basis, and analyses and
evaluations are conducted in the following areas.
• Frequency, scheduling, and time spent on the meetings
• The information supplied in relation to discussions at the meetings (quality and
quantity) and the method of its provision
• Materials, details and methods of explanation, question-and-answer guidelines,
time apportioned for each proposal on the meetings
• Points for improvement of policies based on previous reviews of the Board of
Directors
• Opinions about and points for improvement in the method for reviewing the
Board of Directors,etc.
As a result of the Board of Directors review, the Board of Directors was evaluated
as making ongoing and effective improvements in response to the results of
annual reviews, and achieving even better results every time with respect to
sharing timely and appropriate management information with Executive Officers,
which is essential for the Board to properly fulfill its business supervisory
function.
This evaluation in effect endorses the performance of the Board of Directors,
but going forward further efforts will be made to improve the performance of the
Board of Directors by enhancing the opportunities for exchanging opinions
between the supervisory side and executive side and improving the management
of the Board of Directors review through conducting individual interviews regard-
ing review results and expanding time for opinion exchange.
Policies Regarding Decisions on
Compensation, etc.
1. Basic Policies
(1) As a Company with Three-Committee System, the Company has separate
functions for the supervision and execution of business, with the Board of
Directors undertaking the business supervisory function, and Executive
Officers, the business execution function. Accordingly, Directors and Executive
Officers have separate compensation schemes according to the content and
responsibilities of their duties.
(2) Directors give advice to and supervise the Company’s management from an
objective point of view, and therefore, the compensation scheme for Directors
is the payment of fixed-amount compensation and the payment of a retire-
ment benefit upon resignation.
(3) The compensation scheme for the Executive Officers focuses on incentives for
the realization of management policies and the improvement of business per-
formance, and performance-based compensation will be paid in addition to
the payment of fixed-amount compensation and a retirement benefit upon
resignation. The basic policies of such performance-based compensation are
as follows:
1) Compensation for the improvement of business performance over the mid-
to long-term, and that increases awareness regarding contributing to
increased corporate value
2) Compensation that is closely linked to the Company’s performance and
highly transparent and objective
3) Compensation focused on sharing profits with shareholders and increasing
awareness of management that gives weight to shareholder benefits
(4) In order to introduce an objective perspective from outside the Company and
expert knowledge about the Directors’ and Executive Officers’ compensation
scheme, the Company will hire an external remuneration consultant, and with
the support of the consultant it will consider the compensation levels and
compensation schemes by taking into account external data on the compen-
sation of major companies in Japan operating globally, domestic economic
environment, industry trends, and the Company’s conditions, etc.
2. Compensation Scheme for Directors and Executive Officers and
Policies Regarding Decisions on Compensation, etc.
(1) Compensation scheme for Directors
1) Directors will receive their compensation as a fixed amount, and the com-
pensation to be paid will be set at a level considered reasonable, while tak-
ing into account the contents of the Directors’ duties and the Company’s
conditions, etc.
• Other mechanisms for improving the functioning of the Board of Directors.
2) Directors will receive the retirement benefit upon resignation, and the retire-
24 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
ment benefit to be paid will be set at a level decided on the basis of the
monthly amount of compensation and the number of service years, etc.
Outside Directors
(2) Compensation scheme for Executive Officers
1) Fixed-amount compensation will be set at a level considered reasonable
taking into account the contents of the Executive Officers’ duties and the
Company's conditions, etc.
2) Performance-based compensation will be as follows:
∙ The Mitsubishi Electric Group has been pursuing sustainable growth by main-
taining Balanced Corporate Management based on three perspectives:
growth, profitability and efficiency, and soundness. In line with its efforts to
further increase corporate value, the Group has set its growth targets for fis-
cal 2021 as consolidated net sales of ¥5.0 trillion or more, and an operating
income ratio of 8% or more. The payment base amount for perfor-
mance-based compensation will be determined based on the consolidated
business performance (Net profit attributable to Mitsubishi Electric Corp.
stockholders) while taking into account the Group’s management policy and
targets.
∙ The payment amount of each Executive Officer will be determined, within the
range of ±20% of the payment base amount while taking into account the
performance of the business to which the respective Executive Officer is
assigned, etc.
∙ With the purposes of meshing the interests of shareholders with the Executive
Officers and further raising management awareness that places importance
on the interest of shareholders, and increasing the incentives for the improve-
ment of business performance from the mid- and long-term perspectives,
50% of performance-based compensation will be paid in the form of shares.
The Company sets a rule that, for the compensation paid in the form of
shares, the Company shares will be issued after a three-year waiting period.
In addition,The shares are required to continue holding the shares until 1 year
has passed from resignation.
3) The amount of the retirement benefit will be decided on the basis of the
monthly amount of compensation and the number of service years, etc.
(3) Decision-making process, etc.
Policies regarding decisions on compensation, etc. of Directors and Executive
Officers and individual compensation details based on the policies will be
made through resolutions by the Compensation Committee, which the majority
of the members are Outside Directors. The details of activities of the
Compensation Committee will be reported to the Board of Directors each time
an activity is performed.
Outside Directors
The Company has five Outside Directors, each of whom has no special interest
with the Company. Although companies in which each of the Outside Directors
holds office in or has been a director or officer of include those with trading rela-
tionships with the Company, no such relationships have an impact on the inde-
pendence of each relevant Outside Directors based on the scale or nature of such
trading, and thus they possess no risk of giving rise to any conflict of interest with
the general shareholders of the Company.
Outside Directors are expected to supervise management from a high-level
perspective based on their abundant experience. Those who are comprehensively
judged to possess the character, acumen, and business and professional experi-
ence suited to fulfill that role, and who satisfy the requirements of independent
executives specified by the Tokyo Stock Exchange and the requirements specified
in Mitsubishi Electric’s Guidelines on the Independence of Outside Directors (see
note at below) and thus possess no risk of giving rise to any conflict of interest
with the general shareholders of the company, are selected as Outside Director
candidates by the Nomination Committee.
Independency Guideline for Outside Directors
Mitsubishi Electric Corporation nominates persons with experience in
company management in the business world, attorneys and academics,
among other specialists, who are appropriate to oversee the Company’s
business operations and not falling under any of the following cases, as
candidates for Outside Directors. Each of the following 1), 2), 4) and 5)
includes a case in any fiscal year during the past three fiscal years.
1. Persons who serve as Executive Directors, Executive Officers, man-
agers or other employees (hereinafter ”business executers”) at a
company whose amount of transactions with the Company accounts
for more than 2% of the consolidated sales of the Company or the
counterparty
2. Persons who serve as business executers at a company to which the
Company has borrowings that exceed 2% of the consolidated total
assets
3. Persons who are related parties of the Company’s independent audi-
* For the amount of compensation given to Directors and Executive Officers, please refer to our
tor
web
financial statements. (Only in Japanese)
http://www.MitsubishiElectric.co.jp/ir/data/negotiable_securities/
4. Persons who receive more than ¥10 million of compensation from
the Company as specialists or consultants
5. Persons who serve as Executive Officers (Directors, etc.) of an orga-
nization to which the Company offers contribution that exceeds ¥10
million and 2% of the total revenue of the organization
6. Persons who are the Company’s major shareholders (holding more
than 10% of voting rights) or who serve as their business executers
7. Persons who are related parties of a person or company that have
material conflict of interest with the Company
In addition, Outside Directors enhance the checking function of management by
receiving reports about the activity status of internal auditors, the audit commit-
tee, accounting auditors, and divisions in charge of internal control via the Board
of Directors, and providing valuable comments regarding Mitsubishi Electric’s
management from an objective perspective. By doing this, they bring greater
transparency to the management framework and strengthen the Board's function
of supervising management.
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
25
CSR at Mitsubishi Electric Group
Outside Directors (as of June 27, 2019)
Title
Name
Positions Held
Reasons for Nomination
Outside Director
Mitoji
Yabunaka
Outside Director
Hiroshi
Obayashi
Outside Director
Kazunori
Watanabe
Outside Director
Hiroko
Koide
Outside Director
Takashi
Oyamada
Member
of the Nomination
Committee
Member of the Com-
pensation Committee
Mr. Yabunaka's experience and insights as an expert in interna-
tional affairs cultivated through the course of a career are highly
beneficial to Mitsubishi Electric. Mitsubishi Electric thus expects
him to bring an objective viewpoint to the overseeing of the
Company's business operations.
Chairman
of the Nomination
Committee
Member of the Audit
Committee
Mr. Obayashi's experience and insights cultivated through
the course of a career as a lawyer (public prosecutor, attor-
ney-at-law) are highly beneficial to Mitsubishi Electric. Mitsub-
ishi Electric thus expects him to bring an objective viewpoint to
the overseeing of the Company's business operations.
Member of the Audit
Committee
Member of the Com-
pensation Committee
Mr. Watanabe's experience and insights as a certified public
accountant cultivated over the course of his career are highly
beneficial to Mitsubishi Electric. Mitsubishi Electric thus expects
him to bring an objective viewpoint to the overseeing of the
Company's business operations.
Member
of the Nomination
Committee
Member of the Com-
pensation Committee
Ms. Koide's experience and insights as a business specialist
cultivated over the course of her career in international corpo-
rate management are highly beneficial to Mitsubishi Electric.
Mitsubishi Electric thus expects her to bring an objective view-
point to the overseeing of the Company's business operations.
Board Attendance
Rate (FY2019)
100% (7/7)
100% (7/7)
100% (7/7)
100% (7/7)
Member
of the Nomination
Committee
Member of the Audit
Committee
Mr. Oyamada's experience and insights as a business specialist
cultivated over the course of his career in bank management are
highly beneficial to Mitsubishi Electric. Mitsubishi Electric thus
expects him to bring an objective viewpoint to the oversight of the
Company's business operations.
−
Mitsubishi Electric Corporation held seven Board of Directors meetings during fiscal 2019.
26 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
Compliance
Our Concept of Compliance
The Corporate Ethics and Compliance Statement
With the Mitsubishi Electric Group Corporate Ethics and
Compliance Statement formulated in 2001 as our basic guideline
for compliance, the Mitsubishi Electric Group recognizes the
importance of ethics and absolute compliance with legal require-
ments as a fundamental precondition for the Group’s continued
existence. Based on this awareness, we are attempting to perfect
a compliance system which promotes compliance in the broadest
sense, encompassing the perspective of corporate ethics, rather
than merely focusing on following the letter of the law. At the
same time, we are working to educate our employees in this area.
Compliance with
the Law
Respect for
Human Rights
We will conduct ourselves always in compliance with applicable laws and with a high degree of sensitivity
to changes in social ethics or local practices. We will never establish a target, nor make a commitment,
that can only be achieved with conduct that would violate applicable laws or business ethics or practices.
We will conduct ourselves always with a respect for human rights. We will not discriminate based on nation-
ality, race, religion, gender, disability, or any other reason prohibited by applicable laws nor will we violate
international laws providing protection for individual and human rights or any treaties providing such protec-
tion to which the country where any of our companies is located is a party.
Contributing to
Society
Concurrently with the pursuit of a reasonable profit, we will conduct ourselves always with an awareness of
our corporate social responsibility in order to further the progress of society as a whole.
Collaboration and
Harmonization with the
Community
As a good corporate citizen and neighbor, we will support civic and charitable organizations and activities
in the communities where we reside or work that in our view contribute to community development.
Consideration of
Environmental Issues
As part of our goal to achieve a recycling-oriented society, we will pay attention to and respect the global
environment in every aspect of our business.
Awareness of
Personal Integrity
We will conduct ourselves with the highest integrity, making a proper distinction between public and pri-
vate matters, and we will use company resources—including money, time, and information—for legiti-
mate business purposes. We will use company computers and various networks and online services,
including e-mail and Internet access, primarily for company business.
Mitsubishi Electric Group compliance promotion structures
Associated companies in Japan
Mitsubishi Electric Corporation
Associated companies outside of Japan
President
Executive
Officers Meeting
Corporate Compliance Committee
Legal and regulatory management divisions
Compliance
Promotion Committee
President
Group President
President
Corporate
Compliance Officers
Conference
Corporate
Compliance Officer
Head of each
division
Group Compliance General Manager
Group Vice President, head of site
Compliance Manager
Department Senior Manager
Compliance Leader
Group Compliance
General Manager
Conference
Compliance
Managers
Conference
Compliance Manager
Section Manager
Operation site
Business unit, branch office, manufacturing site, research center
Site-Specific Compliance
Promotion Committee
Compliance Information
Liaison Conference
Compliance
Promotion Committee
Compliance Information
Liaison Conference
Regional Chief
Compliance Officer
Corporate
Compliance
Officer
Regional Compliance
Managers Conferences
Head of each division
Risk Management
Risk Management Framework
The Mitsubishi Electric Group maintains a multi-dimensional risk management
system in which all executive officers participate.
Under this system, executive officers are responsible for risk management in
their assigned areas of operation. In addition, executive officers exchange infor-
mation and participate in important management initiatives and decisions
through regularly scheduled executive officers' meetings.
In the event an incident occurs that seriously calls into question the Group's
social responsibility and is expected to have a profound impact on management,
or in the case of such emergencies as large-scale disasters, accidents or pan-
demics, a company-wide Emergency Response Center will be established to
implement measures under the leadership of the president, to ensure prompt
and proper initial response.
Risk Management Framework (Mitsubishi Electric Group)
Executive Board
Company-wide Emergency Response Office (emergency situations)
Planning Committee
Business Council
Business Investment
Review Committee
Risk Review Board
Joint Review Commission
Regional Corporate Offices
(overseas)
Important matters
Risk cases
Quality / Environment
Disasters, etc.
Operations departments
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
27
CSR at Mitsubishi Electric Group
Information Security
Basic Policy
The Mitsubishi Electric Group handles confidential corporate and personal infor-
mation appropriately as part of its corporate social responsibility to make certain
that such sensitive information does not leaked out and cause concern for our
customers and society, as can be caused by cyber-attacks or the loss of storage
media.
The Mitsubishi Electric Group manages confidential corporate information,
which includes information on Mitsubishi Electric’s sales, engineering matters
and intellectual property, based on the “Declaration of Confidential Corporate
Information Security Management” that was established in February 2005.
Information that is entrusted to us by our corporate customers is managed and
protected in compliance with a non-disclosure agreement, as well as by the same
level of security measures that are applied to our own confidential corporate
information.
Framework and guidelines
The President & CEO assigns a Corporate Manager for Confidential Corporate
Information Management and Personal Information Protection (hereafter
Corporate Manager), who assumes overall responsibility for confidential corpo-
rate information management, and an Audit Manager for Personal Information
Protection, who is responsible for implementing and reporting the results of per-
sonal information audits. The Corporate Manager assumes overall responsibility
for information security, and the Corporate Secretariat for Confidential Corporate
Information Management and Personal Information Protection (hereafter
Corporate Secretariat) under the Corporate Manager is in charge of planning and
promoting information security measures. Responsibility for the actual utilization
and management of confidential corporate information and personal information
lies with the General Manager of each business group (the Confidential Corporate
Information Management and Personal Information Protection Manager) and the
manager of each business site (office directors, etc.). The Business Group
Framework and guidelines
President & CEO
Audit manager
of personal
information
protection
Policy
and
Instruction
Coordination
Business group headquarters
-Managers
(General Managers of
business groups)
-Secretariat
Offices, branches,
works[production plants]
-Managers
(office directors, etc.)
-Secretariat
I
n
s
t
r
u
c
t
i
o
n
Corporate manager
of confidential corporate
information management
and personal information
protection
Principal: Executive Officer
for General Affairs;
Assistant: Executive Officer
for Information Technology
(
Corporate secretariat for
confidential corporate
information management and
personal information
protection
Corporate Administration
Division and Corporate
IT Strategy Division
(
(
(
Overseas regional
representative managers
Coordination
Affiliates in Japan
Affiliates outside Japan
Personal information protection
In efforts to protect personal information, Mitsubishi Electric first created com-
pany rules on personal information protection in October 2001, and since then it
has required all employees and affiliated persons to obey those rules strictly.
Mitsubishi Electric issued a personal information protection policy in 2004,
complying with the requirements of JIS Q 15001:2006 Personal Information
Protection Management Systems. In January 2008, we were granted the right
to use the “PrivacyMark,” which certifies the establishment of management sys-
tems that ensure proper measures for personal information protection. We have
maintained our “PrivacyMark” certification until the present.
We have also conducted a review of our internal regulations to ensure a prop-
er response to Japan’s amended Act on the Protection of Personal Information,
Secretariats and Business Office Secretariats,under the General Manager of each
which went into force in May 2017.
business group and manager of each business site strive to ensure information
security by maintaining close coordination and regularly holding meetings with
Information Security Education
the Corporate Secretariat.
In the event an incident were to occur, reports and instructions would be given
in keeping with this framework and appropriate responses taken to prevent sec-
ondary damage.
Business groups and offices (offices, branches, works [production plants])
issue instructions and guidance on information security to affiliates in and outside
Japan. Paying special attention to the circumstances and special characteristics
of overseas affiliates, the Corporate Secretariat places overseas regional repre-
sentative managers at sites in the Americas, Europe, China, and other Asian
countries and coordinates with them to ensure information security.
Mitsubishi Electric provides the following education programs to foster a corporate culture that
enforces the proper handling of confidential corporate information and personal information.
·Education for all employees
An e-learning program on information security is offered once a year to all of the Company’s
roughly 50,000 employees, to disseminate thorough knowledge of various issues on information
security, including Mitsubishi Electric's policies, the status of information leakage incidents,
laws and regulations on the protection of personal information, the Unfair Competition
Prevention Act, and security measures (human, physical, technological, and organizational) to
be taken by all employees.
·Education corresponding to each career stage
Education on confidential corporate information management and personal information protec-
tion is provided to new employees, employees in their twenties and thirties, and newly appointed
section managers, so that they may fulfill the roles that are expected of them at each career
stage.
·Exercises to practice handling phishing e-mails
As a measure against cyber-attacks, Mitsubishi Electric regularly conduct exercises that allow
all employees, including officers, to verify that they know how to handle phishing e-mails.
Employees of affiliates in Japan can participate in this exercise. At overseas affiliates in the
Americas, Europe, and China, practice exercises are conducted according to local circumstanc-
es under the direction of regional representative managers.
·Other individual training
Employees posted overseas are provided with a preliminary education program, which covers
risks in confidential corporate information management and personal information protection out-
side Japan, examples of information leakage incidents that have occurred overseas, and the
global information security situation.
28 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
E: Environment
Environmental Vision 2021
Mitsubishi Electric Group is promoting environmental activities aimed toward achieving the Environmental Vision 2021, which is our long-term environmental manage-
ment vision established in 2007. The Vision sets 2021 as its target year, coinciding with the 100th anniversary of Mitsubishi Electric's founding. In order to make positive
contributions to the earth and its people through technology and action, we are working toward the realization of a sustainable society through our business activities uti-
lizing wide-ranging and sophisticated technologies, as well as the promotion of proactive and ongoing actions by our employees.
Reduce CO2 emissions
from product usage by 30%
(Base year: fiscal 2001)
Reduce total emissions
from production by 30%
(Base year: fiscal 1991)
Aim to reduce CO2 emissions
from power generation
Environmental Vision
2021
Promote product “3Rs”;
reduce, reuse, and recycle
Reduce resource inputs
Aim for zero emissions
from manufacturing
Creating a
Low-Carbon
Society
Creating a
Recycling-Based
Society
Respecting Biodiversity
Ensuring harmony with nature and
fostering environmental awareness
Environmental Initiatives and the SDGs
Shaping the World of 2030
SDGs Closely Related to Mitsubishi
Electric Group Environmental Activities
Example 1
Offering Technologies that Contribute
to the Conservation of the Aquatic Environment
Example 2
Increasing Product Energy Efficiency
We have provided ozone generators, which use
ozone instead of chlorine to purify water, for nearly
50 years. The ozone generators can be used at
water purification and sewage treatment plants,
pharmaceutical and chemical plants, and aquari-
ums, contributing to the conservation of our aquatic
environment.
Mitsubishi Electric Group products consume elec-
tricity when used. As increased product energy effi-
ciency results in less CO2 generated during use,
our goal is to develop energy-efficient products.
Cultivating Innovation for the Future
Great expectations are being placed on corporate innovation to achieve the SDGs and Paris Agreement goals. Mitsubishi Electric set up the Center for Future Innovation in
July 2015 to promote open innovation, with future-oriented research and development instead of focusing on prolonging the use of existing technologies. Accelerating the
cultivation of innovation in this way, alongside making full use of the strengths of our products and services, will allow us to contribute to the environment across a wide
range of fields.
9th Environmental Plan
Every three years since 1993, Mitsubishi Electric Group has formulated an environmental plan with specific targets, and has continued to make efforts to improve our
environmental management vision on a global scale. In April 2018, in order to achieve the Environmental Vision 2021, we established the 9th Environmental Plan (fiscal
2018–2020) that considers the medium to long-term vision based on the Paris Agreement, as well as future water shortage measures. Furthermore, through this plan,
we aim to contribute to achieving seven of the 17 Sustainable Development Goals (SDGs) established by the United Nations that are deeply related to the environment,
including “7. Affordable and clean energy” and “13. Climate action.”
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
29
CSR at Mitsubishi Electric Group
Major initiatives of the Mitsubishi Electric Group’s 9th Environmental Plan
1. Realizing a Low-carbon Society
(1) Reduce CO2 emissions from production and emissions of non-CO2 greenhouse
gases (gases such as SF6, PFCs and HFCs), and suppress total annual emis-
sions (CO2 equivalent) from 2.66 million tons in the base year*1 to less than
1.47 million tons in fiscal 2021.
(2) Improve the energy-saving performance of products and reduce CO2 emis-
sions from product usage by 35% on average compared to fiscal 2001.
*1 CO2 emissions from production: Mitsubishi Electric, FY1991; affiliates in Japan, FY2001; overseas affili-
ates, FY2006.Non-CO2 greenhouse gases: Mitsubishi Electric and affiliates in Japan, FY2001; overseas
affiliates, FY2006.
2. Creating a Recycling-based Society
(1) Reduce final disposalrate (Japan:below 0.1%;overseas:below0.5%)
(2) Make products compact and lightweight, and reduce resource inputs by an
average of 40% from fiscal 2001.
(3) Reduce water usage per unit of sales by 1% per annum compared to the base
year (FY2011).
3. Creating a Society in Tune with Nature
(1) Based on our guidelines set in line with the Aichi Targets*2, we will conduct liv-
ing creature studies, preserve local species, control non-native species, and
maintain green spaces in consideration of the surrounding ecosystem as part
of our biodiversity protection activities at all manufacturing bases in Japan.
12,000 participants (cumulative total: 51,000 participants).
*2 Global targets adopted at the 10th Meeting of the Conference of the Parties to the Convention of
Biological Diversity (COP 10), which was held in Nagoya City, Aichi Prefecture in October 2010. They
form the core of the Strategic Plan for Biodiversity 2011-2020.
Initiatives for creating a low-carbon society
— Reducing CO2 emissions from product usage by improving the
energy-saving performance of products—
Base year
FY2001
0
10
20
30
40
2012
2016
2017
2018
2019
2021
26%
34%
35%
35%
36%
35%
Environmental Vision
2021 target (30%)
(2) We will continue to hold Mitsubishi Electric Outdoor Classrooms and the
Average reduction rate of CO2 emissions (%)
Satoyama Woodland Preservation Project in Japan, with the aim of exceeding
Initiatives for creating a low-carbon society —Reducing CO2 emissions from production—
Total emissions (10,000t-CO2)
CO2 emissions*3
Non-CO2 greenhouse gas emissions*4
266
146
120
45%
reduction
30%
reduction
128
24
104
134
26
108
127
19
108
143
25
118
130
18
113
144
25
119
147
25
122
186
300
250
200
150
100
50
0
*1 Base year for CO2: Mitsubishi Electric, FY1991; affiliates in
Japan, FY2001; overseas affiliates, FY2006 Base year for non-
CO2 greenhouse gases: Mitsubishi Electric and affiliates in
Japan, FY2001; overseas affiliates, FY2006
*2 The emission coefficient for Japan has been calculated based
on the figure published by the Federation of Electric Power
Companies of Japan at the time of formulation of the 8th
Environmental Plan(2013, two nuclear plants in operation).
*3 The overseas emission coefficient has been calculated in refer-
ence to the figure published by JEMA (2006).
*4 The Global Warming Potential (GWP) of non-CO2 greenhouse
Base year*1
2016
result
2017
result
2018
result
2019
plan
2019
result
2020
plan
2021
plan
Environmental Vision
2021 Target
gases has been calculated in reference to the figure published
in IPCC’s Second Assessment Report (1995).
8th Environmental Plan
*2
9th Environmental Plan
web
For results of fiscal 2019, please refer to the following:
https://www.MitsubishiElectric.com/en/sustainability/environment/report/index.html
Challenging to Solve Environmental Issues by 2050
“Environmental Sustainability Vision
2050” Announced (June 2019)
The Mitsubishi Electric Group has placed contributing to preser-
vation of the environment as an important issue for manage-
ment, and its “Environmental Sustainability Vision 2050”
stipulates that the Group will commit itself to taking the initiative
to solve environmental problems.
Our aim in this environmental declaration is to resolve issues
related to air, land, and water. We hope that all employees in the
Group and those we work with outside of it will passionately
take action and work towards creating a sustainable future.
30 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
Environmental Sustainability Vision 2050
Environmental Declaration
Protect the air, land, and water with our hearts and technologies
to sustain a better future for all.
To solve various factors that lead to environment issues,
the Mitsubishi Electric Group shall unite the wishes of
each and every person, and strive to create new value
for a sustainable future.
1
Apply diverse technologies in
wide-ranging business areas to
solve environmental issues
Three Environmental Action Guidelines
2
Challenge to develop business
innovations for future generations
3
Publicize and share new values
and lifestyles
S: Social
Human rights management
The Mitsubishi Electric Group established Policies on Respect for Human Rights
in September 2017 and declared its commitment to ensure human rights
responses that match international norms. In particular, we are striving to imple-
ment measures to prevent and mitigate adverse impacts on human rights. To do
so, we are conducting due diligence on human rights in conformance with the UN
Guiding Principles on Business and Human Rights, and creating a corrective
mechanism in the event it comes to light that a company’s action or involvement
has inflicted an adverse impact on human rights.
Trend in the number of female employees
(main career track)
Number of Female Employees
Ratio of Female Employees
(No.)
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
8.0%
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
(FY)
Progress of human rights due diligence and materiality
Results of activities in fiscal 2019
1.Human rights impact assessment
Mitsubishi Electric assessed and evaluated the impact on human rights related to the
Group’s corporate activities for a total of 336 sites, including the internal Mitsubishi Electric
offices, domestic affiliated companies, and overseas affiliated companies.
We also checked whether the Technical Intern Training Program has been implemented,
and whether it is operating according to the law.
2.Efforts regarding human rights in the supply chain
Based on the CSR Procurement Guidelines formulated in June 2018, the procurement divi-
sions have begun ensuring that when dealing with transaction partners, agreements are
reached with regard to social issues, including human rights.
3. Human rights education
We provided an e-learning program to 71,588 employees of Mitsubishi Electric and domes-
tic affiliated companies. In addition to the human rights impact assessment, we conducted
human rights education for employees involved in CSR at Mitsubishi Electric offices and at
domestic affiliated companies.
Approaches for fiscal 2020
1. Implement human rights risk reduction measures within the Mitsubishi Electric Group
To prevent the risks pointed out in the human rights impact assessment conducted in fiscal
2019 from surfacing, we will strengthen our efforts through human rights education, and so
on.
2. Human rights efforts in supply chain
Ensure that measures that started in fiscal 2019 to consider social issues, such as human
rights, in agreements concluded with suppliers, will continue. In addition, we will continue to
promote efforts to fully understand human rights violation risks by suppliers.
3. Consider upgrading the system for handling grievances
The Mitsubishi Electric Group has multiple inquiry channels that serve as a system for lis-
tening to various grievances and questions related to human rights. We aim to raise the per-
formance of these channels to meet international standards.
Workforce Diversity
Basic policy
Within today’s rapidly changing workforce environment, providing a workplace
where employees can work to their full potential regardless of gender or age is
essential to business development. Furthermore, it has become more vital than
ever before to employ an even greater diversity of people, given the increasingly
aging and diminishing population in Japan. Based on this awareness, Mitsubishi
Electric promotes employee diversity through the following measures.
Women’s Participation
To formulate and implement original measures that would help female employees
and employees with children form a career while also enriching their personal
lives, Mitsubishi Electric established the CP-Plan* Promotion Center within its
Corporate Human Resources Division in April 2006, with a mandate to promote
recruitment, training, assignment, and institutional initiatives from a diversified
perspective.
*Career management & Personal life well-balanced Plan
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
2017
2018
2019
Outcomes of the Work Style Reform
Three years have passed since Work Style Reform began in fiscal 2017. Through
driving the reform based on the four perspectives, the percentage of employees
who experienced changes in their work style increased and working hours fell
sharply. This reform, therefore, has produced positive outcomes.
Percentage of employees who
responded that they had a good
work-life balance
(Employee Attitude Survey)
Changes in the number of
employees who worked more
than 80 hours of overtime
a month
2017
2018
2019
（FY）
2016
2017
2018
2019
（FY）
Examples of Work Style Reform in the Office
More and more employees are feeling that their work style has changed. For
example, using laptops in meetings is now an everyday sight. We will continue to
foster enhancements in the corporate culture and environment so that all employ-
ees can feel the change. Yet Work Style Reform extends beyond just improving
operational efficiency. To achieve the reform goal of "creating a workplace envi-
ronment in which everyone can maintain physical and psychological health and
work in good spirits," we aim to develop a company where every single employee
is always aware of the value of improving their work and finds their work fulfilling.
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
31
CSR at Mitsubishi Electric Group
Supply Chain Management
Basic policy
procurement officers and other such meetings. Accompanying this initiative, the
The Mitsubishi Electric Group ensures fair and impartial selection and evaluation
supply chain has also expanded to various countries where the Group operates,
of business partners in Japan and overseas by providing an explanation of the
so initiatives are also pursued to mitigate any perceived risks regarding a range
Group’s Purchasing Policy and CSR Procurement Policy, and requesting business
of issues related to labor laws and regulations, and to environmental problems.
partners’ understanding of these policies. By ensuring proper evaluation of sup-
pliers based on selection and evaluation criteria established by the Group, risks
are also mitigated along the supply chain.
The Group's criteria for selecting and evaluating suppliers include not only
quality, cost, delivery schedules, and services, but also initiatives in response to
environmental regulations and CSR initiatives. As a basic policy, the Group prefer-
entially procures materials from suppliers who rank high in a comprehensive
evaluation.
Framework for Promotion of Supply Chain Management
The Mitsubishi Electric Group launched the WΣ21II (Worldwide Strategic
Integration for Global Markets in the 21st Century Advance to the Next Stage)*
activity in April 2017, and is promoting optimal procurement activities suited to
each region through the Materials Planning Office. The Materials Planning Office
was established in collaboration among regional corporate offices in China, Asia,
Europe and Americas to implement purchasing strategies through conferences of
* WΣ21II: An initiative of purchasing departments to work toward achieving the Mitsubishi Electric Group’s
management goal of reaching net sales of 5 trillion yen and an operating income ratio of 8% or more by
2020.
Framework for promotion of supply chain management
Mitsubishi Electric
Head Office Corporate
Purchasing Division
Purchasing divisions of domestic
manufacturing sites and research
facilities
Cooperation
Purchasing divisions of overseas
affiliated companies
(China, Asia, Europe, US)
Overseas Materials
Planning Office
Purchasing divisions of domestic
affiliated companies
Quality Management
Basic policy
each product and are implementing concrete improvement initiatives in relation
The Mitsubishi Electric Group is committed to improving its technologies and ser-
to quality assurance measures (quality management) for processes at each stage,
vices by applying creativity to all aspects of its business, to thereby enhance the
from market surveys regarding Mitsubishi Electric products, through product
quality of life in our society, as stated in our corporate mission. This commitment
planning, development and design, manufacturing, transportation, storage, instal-
inherits the principles outlined in the Keys to Management (in Japanese, Keiei no
lation, maintenance and servicing, and education, to the disposal of the product.
Yotei) with regard to ”our contribution to social prosperity,” ”quality improvement,”
In addition, in operating our Quality Management System (QMS), we regularly
and ”customer satisfaction,” and forms the basic spirit of our relationship with
check our PDCA cycle with reference to ISO and other international certification
society and our customers.
standards, seeking to realize ever higher quality by process improvement.
To give concrete shape to this basic spirit, the Seven Guiding Principles define
our actions in response to society and customers. It teaches us to establish rela-
tionships based on trust, provide the best products and services with unsur-
passed quality, and respond to customer expectations through technology by
promoting research and development and pioneering new markets.
Executive Officer in Charge of
Quality Assurance
Promotion of Quality Assurance and Improvement Activities
President
Business Group
Business Group
General Manager of
Business Group
General Manager of
Business Group
Quality Assurance Manager
Quality Assurance Manager
Executive Officers’ Meeting
Head Office Liaison Committee
t
n
e
m
t
r
a
p
e
D
g
n
n
n
a
P
l
i
Corporate Quality
Assurance Managers’
Committee
Factory
Factory
Factory Manager
Factory Manager
Quality Assurance Manager
Quality Assurance Manager
Individual quality improvement projects and activities
Under these principles, we constantly strive to increase customer satisfaction
and contribute to social prosperity in all aspects of our business, from the pro-
duction of high-quality, easy-to-use products to our after-purchase support and
response to major issues.
Management system
Based on the Four Basic Quality Assurance Principles, we have established a sys-
tem for quality assurance and improvement activities throughout the entire Group,
including the appointment of a quality assurance promotion manager in all busi-
ness group headquarters. We have also formulated quality assurance guidelines
to ensure compliance with quality assurance legislation and standards and fur-
ther develop quality improvement activities. At the level of management, we also
regularly report on the status of quality at meetings of executive officers.
Worldwide manufacturing bases take responsibility for the quality assurance of
e
c
n
a
r
u
s
s
A
y
t
i
l
a
u
Q
e
t
a
r
o
p
r
o
C
32 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
Philanthropic Activities
Philosophy and Policies
ronment in the vicinity of operational sites with the help of employee volunteers.
The Mitsubishi Electric Group shares a common Philosophy and Policies based
The Mitsubishi Electric Science Workshop invites children to experience the fun of
on its Corporate Mission and Seven Guiding Principles, and carries out a variety
science with the aim of nurturing future engineers. In addition to these key activi-
of activities accordingly.
Philosophy
ties undertaken by Mitsubishi Electric, employees at Group affiliates in Japan and
overseas are strongly committed to philanthropic activities, participating in
As a corporate citizen committed to meeting societal needs and expectations, the
various volunteer activities and supporting local social welfare organizations and
Mitsubishi Electric Group will make full use of the resources it has at hand to
sports teams.
contribute to creating an affluent society in partnership with its employees.
Policies
Foundations
• We shall carry out community-based activities in response to societal needs in
The Mitsubishi Electric America Foundation and Mitsubishi Electric Thai
the fields of social welfare and global environmental conservation.
Foundation, both founded in 1991, also carry out various activities in the spirit of
• We shall contribute to developing the next generation through activities that
the Mitsubishi Electric Group’s Philosophy and Policies. The Mitsubishi Electric
support the promotion of science and technology, culture and arts, and sports.
America Foundation, with the cooperation of its branches in the United States,
helps young people with disabilities to become employed and participate more
Community Contributions and Human Resource Development Activities
fully in society. The Mitsubishi Electric Thai Foundation, in addition to providing
The Mitsubishi Electric SOCIO-ROOTS Fund matching-gift program supports such
scholarships to university students and supporting a school lunch program for
beneficiaries as social welfare facilities through donations, with the Company
grade school students, has been promoting employee-involved volunteer activities
making contributions equivalent in value to the donations of employees. The
that support education and environmental protection.
“Satoyama” Woodland Preservation Project focuses on restoring the natural envi-
“Satoyama” Woodland Preservation Project
Mitsubishi Electric America Foundation was chosen to receive the “2018
CATALYST AWARD” by the American Association of People with Disabilities
(the United States)
The Mitsubishi Electric Science Workshop
Local Group companies engaging in joint planting activities (Thailand)
“Mouth and Foot Painting Artists of the World Exhibition”
(Mitsubishi Electric Building Techno-Service Co., Ltd.)
Supporting the Special Olympics
(Mitsubishi Electric Europe B.V. Italian Branch)
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
33
CSR at Mitsubishi Electric Group
ESG Information Disclosure List (CSR website)
President’s Message
CSR at Mitsubishi Electric
Corporate Strategy
Mitsubishi Electric’s Business Segments
Initiatives that Contribute to Addressing Social Issuse
CSR Management
CSR Materiality
Initiatives to Address the SDGs
Communication with Stakeholders
Corporate Governance
Compliance
Risk Management
Our Approach to Information Security
R&D/Technology
Intellectual Property
Communication with Shareholders and Investors
Responsibility to Customers
Human Rights
Labor Practices
Supply Chain Management
Philanthropic Activities
ISO26000
GRI Standard
Environmental Reporting Guidelines 2018
Governance
Environment
Social
About the Report
Guideline Comparison Table
ESG Survey Index
Initiatives to Create Value
Initiatives Related to the Value Chain
Management
CSR Materiality and SDGs Management
Initiatives/External Evaluation
Process of Identification and Review of CSR Materiality
Management of CSR Materiality
Realize a Sustainable Society
Provide Safety, Security, and Comfort
Respect Human Rights and Promote the Active Participation of Diverse Human Resources
Strengthen Corporate Governance and Compliance on a Continuous Basis
Status of Communication
Results of Reader Surveys
Interviews with Experts
Dialogues with Experts
Measures for Internal Dissemination
For more information related to CSR at the Mitsubishi Electric Group, refer to the following websites:
web
CSR
https://www.MitsubishiElectric.com/en/sustainability/csr/index.html
Environment
https://www.MitsubishiElectric.com/en/sustainability/environment/index.html
About
https://www.MitsubishiElectric.com/en/about/index.html
Overview of CSR-related information disclosure
34 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
Directors and Executive Officers
Directors (As of June 27, 2019)
Executive Officers (As of April 1, 2019)
Masaki Sakuyama ............................Chairman
Takeshi Sugiyama
Nobuyuki Okuma
Akihiro Matsuyama ..........................Chairman of the Audit Committee
Masahiko Sagawa ............................Member of the Audit Committee
Shinji Harada .................................... Member of the Nomination Committee,
Chairman of the Compensation Committee
Tadashi Kawagoishi ..........................Member of the Compensation Committee
Mitoji Yabunaka ................................ Member of the Nomination Committee,
Member of the Compensation Committee
Hiroshi Obayashi .............................. Chairman of the Nomination Committee,
Member of the Audit Committee,
Attorney-at-Law
Kazunori Watanabe .......................... Member of the Audit Committee,
Member of the Compensation Committee,
Certified Public Accountant,
Registered Tax Accountant
Hiroko Koide ..................................... Member of the Nomination Committee,
Member of the Compensation Committee
Takashi Oyamada ............................. Member of the Nomination Committee,
Member of the Audit Committee,
Senior Advisor, MUFG Bank, Ltd.
Representative Executive Officers (As of April 1, 2019)
Takeshi Sugiyama
Yutaka Ohashi
Nobuyuki Okuma
President & CEO:
Takeshi Sugiyama
Executive Vice President:
Yutaka Ohashi ................................... In charge of Export Control and Information Systems &
Network Service
Senior Vice Presidents:
Nobuyuki Okuma .............................. In charge of Corporate Strategic Planning and
Operations of Associated Companies
Yasuyuki Ito .......................................In charge of Building Systems
Kei Uruma .........................................In charge of Public Utility Systems
Hisashi Kato ...................................... In charge of Government &
External Relations, Export Control and
Intellectual Property
Executive Officers:
Takashi Nishimura ............................In charge of Communication Systems
Masamitsu Okamura ........................In charge of Semiconductor & Device
Masahiro Fujita ................................. In charge of IT and Research & Development
Satoshi Matsushita ........................... In charge of Global Strategic Planning & Marketing
Hiroshi Onishi ................................... In charge of Automotive Equipment
Yoshikazu Miyata .............................. In charge of Factory Automation Systems
Tadashi Matsumoto .......................... In charge of Living Environment & Digital Media
Equipment
Jun Nagasawa .................................. In charge of Advertising and
Domestic Marketing
Shinji Harada .................................... In charge of General Affairs,
Human Resources and Public Relations
Tadashi Kawagoishi ..........................In charge of Accounting and Finance
Takakazu Murozono ......................... In charge of Auditing and Legal Affairs & Compliance
Koichi Orito .......................................In charge of Energy & Industrial Systems
Juichi Shikata ................................... In charge of Purchasing
Yoshihisa Hara ..................................In charge of Electronic Systems
Atsuhiro Yabu .................................... In charge of Total Productivity Management &
Environmental Programs
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
35
Organization (As of June 27, 2019)
Corporate Auditing Div.
Corporate Marketing Group
Board of Directors
Chairman
Nomination
Committee
Audit
Committee
Compensation
Committee
Audit Committee Office
Executive Officers’
Meeting
Corporate Strategic
Planning Div.
Corporate IT Strategy Div.
Associated
Companies Div.
Government &
External Relations Div.
Corporate
Administration Div.
Corporate Human
Resources Div.
Corporate
Accounting Div.
Corporate Finance Div.
Corporate
Purchasing Div.
Public Relations Div.
Corporate
Advertising Div.
Corporate Legal &
Compliance Div.
Corporate Export
Control Div.
Corporate Licensing Div.
Global Strategic Planning &
Marketing Group
Corporate Total Productivity
Management & Environmental
Programs Group
Corporate Research and
Development Group
Information Systems &
Network Service Group
Public Utility Systems Group
Energy & Industrial
Systems Group
Building Systems Group
Electronic Systems Group
Corporate Intellectual
Property Div.
Communication Systems Group
Living Environment & Digital
Media Equipment Group
Factory Automation
Systems Group
Automotive Equipment Group
Semiconductor & Device Group
36 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
Business Planning Office
Market Planning & Administration Dept.
Compliance Dept.
Marketing Research & Business Development Dept.
Olympic and Paralympic Promotion Dept.
Branch Offices (Hokkaido, Tohoku, Kanetsu, Kanagawa,
Hokuriku, Chubu, Kansai, Chugoku, Shikoku, Kyushu)
Global Planning & Administration Div.
Compliance Dept.
Regional Marketing Div.
Regional Strategic Development Div.
Regional Corporate Offices
Americas (U.S.A.)
Europe (U.K.)
Asia (Singapore)
China
Taiwan
Corporate Productivity Engineering Dept.
Compliance Dept.
Corporate Quality Assurance Planning Dept.
Corporate Environmental Sustainability Group
Corporate Logistics Dept.
Design Systems Engineering Center
Manufacturing Engineering Center
Component Production Engineering Center
Planning & Administration Dept.
Compliance Dept.
Advanced Technology R&D Center
Information Technology R&D Center
Industrial Design Center
Planning & Administration Dept.
Compliance Dept.
Information Systems & Network Service Div.
Planning & Administration Dept.
Compliance Dept.
Engineering Planning Dept.
ITS Business Development Group
Public-Use Systems Marketing Div.
Transportation Systems Div.
Overseas Marketing Div.
Plant Engineering & Construction Div.
Branch Offices
Kobe Works, Itami Works, Nagasaki Works
Planning & Administration Dept.
Compliance Dept.
Engineering Planning Dept.
Nuclear Power Plant Technical Supervisory Office
Business Development & Strategic Planning Div.
Transmission & Distribution Systems Marketing Div.
Power & Energy Systems Marketing Div.
Nuclear Energy, Advanced Magnetic Systems Marketing Div.
Power Plant Engineering & Construction Center
Branch Offices
Energy Systems Center, Transmission & Distribution Systems Center,
Power Distribution Systems Center
Planning & Administration Dept.
Compliance Dept.
Engineering Planning Dept.
Domestic Marketing Div.
Overseas Marketing Div.
Building Systems Field Operation Div.
Branch Offices
Inazawa Works
Electronic Systems Compliance Dept.
Planning & Administration Dept.
High-precision Positioning Systems Dept.
Defense Systems Div.
Space Systems Div.
Integrated Sensing System Div.
Branch Offices
Communication Systems Center, Kamakura Works
Planning & Administration Dept.
Compliance Dept.
Communication Systems Engineering Center
Telecommunication Systems Sales & Marketing Div.
Branch Offices
Communication Networks Center
Planning & Administration Dept.
Compliance Dept.
Engineering Dept.
Branding Strategy Dept.
External Relations Dept.
Customer Satisfaction Promotion Dept.
Marketing & Operations Strategic Planning Dept.
Eco-Facility Systems Marketing Dept.
Air-Conditioning & Refrigeration Systems Div.
Overseas Air-Conditioning & Refrigeration Systems Div.
Lighting, Ventilation, Home Equipment & Solutions Div.
Home Appliances & Digital Media Equipment Div.
Living Environment Systems Laboratory
Branch Offices
Nakatsugawa Works, Air-Conditioning & Refrigeration Systems Works,
Shizuoka Works, Kyoto Works, Gunma Works
Planning & Administration Dept.
Compliance Dept.
Solution Business Strategy Div.
Industrial Products Marketing Div.
Industrial Automation Marketing Div.
Overseas Marketing Div.
Branch Offices
Nagoya Works, Fukuyama Works
Planning & Administration Dept.
Automotive Equipment Compliance Dept.
Automotive Equipment Marketing Div.
Automotive Electronics Development Center
Branch Offices
Himeji Works, Sanda Works
Planning & Administration Dept.
Compliance Dept.
Semiconductor & Device Marketing Div. A
Semiconductor & Device Marketing Div. B
LCD Div.
Branch Offices
Power Device Works, High Frequency & Optical Device Works
Major Subsidiaries and Affiliates (As of March 31, 2019)
Manufacturing
Sales/Installation/Services
Comprehensive Sales Companies
Energy and
Electric Systems
Toyo Electric Corporation
Mitsubishi Electric Building Techno-Service Co., Ltd.
Mitsubishi Electric Control Panel Corporation
Mitsubishi Electric Plant Engineering Corporation
Mitsubishi Electric Power Products, Inc.
Mitsubishi Electric Control Software Corporation
Mitsubishi Electric Shanghai Electric Elevator Co., Ltd.
Ryoden Elevator Construction, Ltd.
Industrial
Automation
Systems
Mitsubishi Elevator Asia Co., Ltd.
Mitsubishi Elevator Korea Co., Ltd.
Taiwan Mitsubishi Elevator Co., Ltd.
Toshiba Mitsubishi-Electric Industrial Systems Corporation
Mitsubishi Hitachi Home Elevator Corporation
Shanghai Mitsubishi Elevator Co., Ltd.
Ryoko Co., Ltd.
RYO-SA BUILWARE Co., Ltd.
Mitsubishi Elevator Hong Kong Co., Ltd.
Mitsubishi Electric Saudi Ltd.
Hitachi Mitsubishi Hydro Corporation
AG MELCO Elevator Co. L.L.C.
DB Seiko Co., Ltd.
Mitsubishi Electric Automotive America, Inc.
Mitsubishi Electric Thai Auto-Parts Co., Ltd.
Mitsubishi Electric Automotive (China) Co., Ltd.
Mitsubishi Electric Automotive de Mexico, S.A. de C.V.
Mitsubishi Electric Automation Manufacturing
(Changshu) Co., Ltd.
Setsuyo Astec Corporation
Ryowa Corporation
Mitsubishi Electric Mechatronics
Engineering Corporation
Meldas System Engineering Corporation
Mitsubishi Electric Mechatronics Software Corporation
Mitsubishi Electric Automation (Hong Kong) Ltd.
Mitsubishi Electric Dalian Industrial Products Co., Ltd.
Mitsubishi Electric Automation Korea Co., Ltd.
Shizuki Electric Co., Inc.
Nippon Injector Corporation
Shihlin Electric & Engineering Corporation
SETSUYO ENTERPRISE CO., LTD.
Information and
Communication
Systems
Mitsubishi Electric TOKKI Systems Corporation
Mitsubishi Electric Information Network Corporation
Mitsubishi Precision Co., Ltd.
SPC Electronics Corporation
Seiryo Electric Co., Ltd.
Miyoshi Electronics Corporation
Mitsubishi Electric Information Systems Corporation
Mitsubishi Space Software Co., Ltd.
Mitsubishi Electric Business Systems Co., Ltd.
Mitsubishi Electric Micro-Computer Application
Software Co., Ltd.
Electronic
Devices
Melco Display Technology Inc.
Melco Power Device Corporation
Vincotech Holdings S.à r.l.
Home Appliances
Others
Mitsubishi Electric Lighting Corporation
Mitsubishi Electric Home Appliance Co., Ltd.
Mitsubishi Electric Consumer Products (Thailand) Co., Ltd.
Shanghai Mitsubishi Electric & Shangling
Air-Conditioner and Electric Appliance Co., Ltd.
Mitsubishi Electric (Guangzhou) Compressor Co., Ltd.
Mitsubishi Electric Hydronics & IT Cooling Systems S.p.A.
Siam Compressor Industry Co., Ltd.
Mitsubishi Electric Air Conditioning Systems Europe Ltd.
Kang Yong Electric Public Co., Ltd.
Itec Hankyu Hanshin Co., Ltd.
Melco Semiconductor Engineering Corporation
Mitsubishi Electric Living Environment
Systems Corporation
Mitsubishi Electric Life Network Co., Ltd.
Mitsubishi Electric Air Conditioning &
Refrigeration Equipment Sales Co., Ltd.
Mitsubishi Electric Air Conditioning &
Refrigeration Systems Co., Ltd.
Melco Facilities Corporation
Mitsubishi Electric Kang Yong Watana Co., Ltd.
Mitsubishi Electric Air-Conditioning &
Visual Information Systems (Shanghai) Ltd.
Mitsubishi Electric Trading Corporation
Mitsubishi Electric Engineering Co., Ltd.
Mitsubishi Electric Logistics Corporation
Mitsubishi Electric System & Service Co., Ltd.
Mitsubishi Electric Life Service Corporation
The Kodensha Co., Ltd.
iPLANET Inc.
Melco Trading (Thailand) Co.,Ltd.
Mitsubishi Electric Credit Corporation
KITA KOUDENSHA Corporation
Chiyoda Mitsubishi Electric Co., Ltd. and
other regional comprehensive sales
companies (9 companies)
Mitsubishi Electric Europe B.V.
Mitsubishi Electric US, Inc.
Mitsubishi Electric & Electronics
(Shanghai) Co., Ltd.
Mitsubishi Electric (H.K.) Ltd.
Mitsubishi Electric Taiwan Co., Ltd.
Mitsubishi Electric Asia Pte. Ltd.
Mitsubishi Electric Australia Pty. Ltd.
Ryoden Trading Co., Ltd.
Kanaden Corporation
Mansei Corporation
Notes:
1. Comprehensive sales companies include several companies that are responsible for selling products from a number of businesses, and therefore these are placed into their own separate category rather than grouped by
business segment.
2. Consolidated subsidiaries are shaded in , while equity method companies are shaded in .
3. As of the end of March 2019, the number of consolidated subsidiaries and equity method companies are 206 and 37, respectively.
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
37
38 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
Financial Section
Contents
40 Five-Year Summary
41 Financial Review
56 Consolidated Statement of Financial Position
58 Consolidated Statement of Profit or Loss
59 Consolidated Statement of Comprehensive Income
60 Consolidated Statement of Changes in Equity
62 Consolidated Statement of Cash Flows
63 Notes to Consolidated Financial Statements
126 Independent Auditors’ Report
表紙
39
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Mitsubishi Electric Corporation and Subsidiaries
Years ended March 31
U.S. GAAP
Yen (millions)
IFRS
2015
2016
2017
2018
2018
2019
U.S. dollars
(thousands)
IFRS
2019
Revenue
Operating profit
¥ 4,323,041
¥ 4,394,353
¥ 4,238,666
¥ 4,431,198
¥ 4,444,424
¥ 4,519,921
$ 40,720,009
317,604
301,172
270,104
318,637
327,444
290,477
2,616,910
Profit before income taxes
322,968
318,476
296,249
364,578
353,206
315,958
2,846,468
Net profit attributable to Mitsubishi
Electric Corp. stockholders
234,694
228,494
210,493
271,880
255,755
226,648
2,041,874
Cash flows from operating activities
378,313
366,677
365,950
240,450
265,768
239,817
2,160,514
Cash flows from investing activities
(198,163)
(255,443)
(148,632)
(178,219)
(182,015)
(210,668)
(1,897,910)
Free cash flows
180,150
111,234
217,318
62,231
83,753
29,149
262,604
Cash flows from financing activities
(49,623)
(82,144)
(123,495)
(128,291)
(149,813)
(112,067)
(1,009,613)
Dividends paid
42,936
57,963
57,963
68,696
68,696
85,871
773,613
Capital expenditures (Based on the
recognized value of property, plant and
194,458
177,801
175,542
181,513
181,513
198,442
1,787,766
equipment)
Depreciation
156,205
145,249
141,584
154,559
153,161
152,315
1,372,207
R&D expenditures
195,314
202,922
201,330
210,308
210,308
212,794
1,917,063
Cash and cash equivalents
568,517
574,170
662,469
599,199
599,199
514,224
4,632,649
Bonds and borrowings
381,994
404,039
352,124
311,485
311,950
298,438
2,688,631
Mitsubishi Electric Corp. stockholders'
equity
Total assets
Per Share Amounts:
Earnings per share attributable to
Mitsubishi Electric Corp. stockholders
(Yen/U.S. dollars)
Basic
Diluted
Cash dividends declared
(Yen/U.S. dollars)
Mitsubishi Electric Corp. stockholders'
equity (Yen/U.S. dollars)
Financial Ratios:
Operating profit ratio (%)
Return on revenue (%)
Return on equity (ROE) (%)
Return on assets (ROA) (%)
Mitsubishi Electric Corp. stockholders'
equity ratio (%)
Bonds and borrowings to total assets (%)
1,842,203
1,838,773
2,039,627
2,259,355
2,294,174
2,399,946
21,621,135
¥ 4,059,451
¥ 4,059,941
¥ 4,172,270
¥ 4,264,559
¥ 4,305,580
¥ 4,356,211
$ 39,245,144
¥
109.32
¥
106.43
¥
98.07
¥
126.70
¥
119.19
¥
105.65
$
―
27
―
27
―
27
―
40
119.19
105.65
40
40
0.952
0.952
0.360
¥
858.11
¥
856.52
¥
950.37
¥
1,052.96
¥
1,069.19
¥
1,118.83
$
10.080
7.3
5.4
13.9
6.1
45.4
9.4
6.9
5.2
12.4
5.6
45.3
10.0
6.4
5.0
10.9
5.1
48.9
8.4
7.2
6.1
12.6
6.4
53.0
7.3
7.4
5.8
11.7
6.0
53.3
7.2
6.4
5.0
9.7
5.2
55.1
6.9
―
―
―
―
―
―
―
―
―
Employees (at the end of the year)
129,249
135,160
138,700
142,340
142,340
145,817
Total Shareholder Return (%)
(Comparison Index：
Nikkei stock average) (%)
125.3
129.5
106.2
113.0
144.4
127.5
156.8
144.7
156.8
144.7
136.3
143.0
1. The consolidated financial statements of the Group are prepared in accordance with International Financial Reporting Standards (IFRS) from the year ended
March 31, 2019 and also for the fiscal year ended March 31, 2018 as comparative information.
2. R&D expenditures include elements spent on quality improvements which constitute manufacturing costs.
3. Diluted earnings per share attributable to Mitsubishi Electric Corp. stockholders is equal to Basic earnings per share attributable to Mitsubishi Electric Corp.
stockholders under IFRS, as no dilutive securities existed.
4. U.S. dollar amounts are translated from yen at the rate of ¥111= U.S.$1, the approximate rate on the Tokyo Foreign Exchage Market on March 31, 2019.
40
Five-Year Summary
Five-Year SummaryMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 OVERVIEW
During the fiscal year ended March 31, 2019, the economy saw a buoyant expansion in the U.S. and a slight slowdown in
the Chinese economy, while there were gradual trends of recovery in Japan and Europe despite a recent slowdown in
some indicators such as export and production. In addition, the yen, compared to the previous fiscal year, was substantially
unchanged against the U.S. dollar, and remained strong against the euro in and after August.
Under these circumstances, the Mitsubishi Electric Group has been working even harder than before to promote growth
strategies rooted in its advantages, while continuously implementing initiatives to strengthen its competitiveness and
business structure.
As a result, the Mitsubishi Electric Group has recorded revenue of ¥4,519.9 billion and consolidated operating profit of
¥290.4 billion for fiscal 2019. In addition profit before income taxes was ¥315.9 billion and net profit attributable to
Mitsubishi Electric Corp. stockholders was ¥226.6 billion.
Revenue
Revenue of ¥4,519.9 billion was recorded for fiscal 2019, an increase of ¥75.4 billion compared to the previous fiscal year.
This was due to increased revenue mainly in the Energy and Electric Systems, Industrial Automation Systems and Home
Appliances segments.
Operating Profit
The cost of sales increased by ¥96.4 billion compared to the previous fiscal year to ¥3,186.8 billion, representing 70.5% of
total revenue, a deterioration of 1.0 percentage point. Selling, general and administrative (SG&A) expenses totaled
¥1,043.2 billion, up ¥21.9 billion year on year. As a result, the ratio of SG&A expenses to revenue deteriorated by 0.1 of a
percentage point year on year to 23.1%. Other profit (loss) totaled ¥0.7 billion, an improvement of ¥5.8 billion year on year.
Accounting for the aforementioned factors, operating profit amounted to ¥290.4 billion, a decrease of ¥36.9 billion
compared to the previous fiscal year. This decrease was primarily attributable to decreases in operating profit in the
Industrial Automation Systems and Electronic Devices business segments.
Profit Before Income Taxes
Financial income amounted to ¥9.7 billion, an increase of ¥1.1 billion year on year, and financial expenses totaled ¥4.3
billion, a decrease of ¥2.4 billion year on year. Share of profit of investments accounted for using the equity method totaled
¥20.1 billion, a decrease of ¥3.8 billion compared to the previous fiscal year.
Accounting for the aforementioned factors, profit before income taxes decreased by ¥37.2 billion compared to the
previous fiscal year to ¥315.9 billion, for a ratio to revenue of 7.0%.
Net Profit Attributable to Mitsubishi Electric Corp. Stockholders
Net profit attributable to Mitsubishi Electric Corp. stockholders decreased by ¥29.1 billion year on year to ¥226.6 billion (a
ratio to revenue of 5.0%) largely on the back of a decrease in profit before income taxes.
OVERVIEW
41
Financial ReviewMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Business Risks
The Mitsubishi Electric Group (hereinafter “the Group”) is involved in development, manufacturing 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 associates and joint ventures.
(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, tsunamis, 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.
42
OVERVIEW
Financial ReviewMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 RESULTS BY BUSINESS SEGMENT
Revenue by Business Segment
Years ended March 31
Energy and Electric
Systems
Industrial Automation
Systems
Information and
Communication Systems
Electronic Devices
Home Appliances
Others
Subtotal
Eliminations
Consolidated total
U.S. GAAP
Yen (millions)
IFRS
2015
2016
2017
2018
2018
2019
U.S. dollars
(thousands)
IFRS
2019
¥ 1,228,958 ¥ 1,264,604 ¥ 1,227,906 ¥ 1,241,952
¥ 1,253,062 ¥ 1,296,745
$ 11,682,387
1,282,749
1,321,937
1,310,136
1,444,928
1,444,928
1,467,633
13,221,919
559,521
561,119
447,754
436,068
438,184
426,269
3,840,261
238,402
944,830
740,517
4,994,977
(671,936)
202,294
1,049,369
764,346
5,138,957
(707,759)
¥ 4,323,041 ¥ 4,394,353 ¥ 4,238,666 ¥ 4,431,198
186,554
1,004,415
713,603
4,890,368
(651,702)
211,580
982,064
707,746
5,049,050
(654,697)
202,294
1,049,369
659,059
5,046,896
(602,472)
199,908
1,074,044
676,736
5,141,335
(621,414)
¥ 4,444,424 ¥ 4,519,921
1,800,973
9,676,072
6,096,721
46,318,333
(5,598,324)
$ 40,720,009
Operating Profit by Business Segment
Years ended March 31
Energy and Electric
Systems
Industrial Automation
Systems
Information and
Communication Systems
Electronic Devices
Home Appliances
Others
Subtotal
Eliminations and
Corporate
Consolidated total
U.S. GAAP
Yen (millions)
IFRS
2015
2016
2017
2018
2018
2019
U.S. dollars
(thousands)
IFRS
2019
¥
72,448 ¥
50,342 ¥
44,319 ¥
51,710
¥
65,457 ¥
82,501
$
743,252
145,982
159,160
140,073
190,826
187,350
142,563
1,284,351
18,934
30,163
54,296
23,742
345,565
14,999
16,870
63,856
23,620
328,847
12,700
8,382
69,696
23,214
298,384
11,987
14,554
56,057
23,900
349,034
11,340
14,164
55,496
24,034
357,841
12,247
1,442
59,451
24,172
322,376
110,333
12,991
535,595
217,766
2,904,288
(27,961)
(27,675)
(28,280)
(30,397)
(30,397)
(31,899)
(287,378)
¥
317,604 ¥
301,172 ¥
270,104 ¥
318,637
¥
327,444 ¥
290,477
$ 2,616,910
Energy and Electric Systems
The social infrastructure systems business remained substantially unchanged in orders compared to the previous fiscal
year, while revenue increased compared to the previous fiscal year due primarily to increases in the transportation systems
business inside and outside Japan and the power systems business in Japan.
The building systems business remained substantially unchanged in both orders and revenue compared to the previous
fiscal year, experiencing a decrease in the new installation of elevators and escalators in China and buoyant growth in the
renewal business in Japan and other factors.
As a result, revenue for this segment increased by 3% from the previous fiscal year to 1,296.7 billion yen. Operating profit
increased by 17.0 billion yen from the previous fiscal year to 82.5 billion yen due primarily to an increase in revenue.
Industrial Automation Systems
The factory automation systems business saw decreases in both orders and revenue from 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 revenue from the previous fiscal year due primarily
to increases in Japan, Europe and other markets in Asia, as well as increased revenue in electric-vehicle related equipment
in response to market growth worldwide.
As a result, revenue for this segment increased by 2% from the previous fiscal year to 1,467.6 billion yen. Operating
profit decreased by 44.7 billion yen from the previous fiscal year to 142.5 billion yen due primarily to a shift in product mix,
increases in material prices and upfront investment for growth drivers.
RESULTS BY BUSINESS SEGMENT
43
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Information and Communication Systems
The telecommunications systems business saw decreases in both orders and revenue compared to the previous fiscal year
due primarily to decreased demand in communications infrastructure equipment.
The information systems and service business remained substantially unchanged in orders, while revenue increased
compared to the previous fiscal year owing to an increase in the system integrations business.
The electronic systems business saw a decrease in orders compared to the previous fiscal year mainly due to a decrease
in the space systems business, while revenue experienced a decrease compared to the previous fiscal year due primarily to
a decrease in the defense systems business.
As a result, revenue for this segment decreased by 3% from the previous fiscal year to 426.2 billion yen. Operating profit
increased by 0.9 billion yen from the previous fiscal year to 12.2 billion yen due primarily to a shift in project portfolios.
Electronic Devices
The electronic devices business saw a decrease in orders and revenue fell by 1% from the previous fiscal year to 199.9
billion yen mainly due to decreased demand for optical communication devices.
Operating profit decreased by 12.7 billion yen from the previous fiscal year to 1.4 billion yen due primarily to a decrease
in revenue and a shift in product mix.
Home Appliances
The home appliances business saw a 2% increase in revenue from the previous fiscal year to 1,074.0 billion yen due to
increases in revenue of air conditioners for Japan, Europe and North America.
Operating profit increased by 3.9 billion yen compared to the previous fiscal year to 59.4 billion yen due primarily to an
increase in revenue.
Others
Revenue increased by 3% compared to the previous fiscal year to 676.7 billion yen mainly due to an increase in revenue at
affiliated companies involved in logistics.
Operating profit increased by 0.1 billion yen from the previous fiscal year to 24.1 billion yen due primarily to an increase in
revenue.
44
RESULTS BY BUSINESS SEGMENT
Financial ReviewMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 RESULTS BY GEOGRAPHIC SEGMENT
Revenue from external customers by the location of customers
Years ended March 31
2015
2016
2017
2018
2018
2019
U.S. GAAP
Yen (millions)
IFRS
U.S. dollars
(thousands)
IFRS
2019
Japan
North America
Asia (excluding Japan)
Europe
Others
¥ 2,512,357 ¥ 2,521,194 ¥ 2,405,552 ¥ 2,423,626
¥ 2,438,942 ¥ 2,556,644
$ 23,032,829
398,501
959,540
360,668
91,975
447,578
963,684
369,978
91,919
422,259
417,423
419,121
429,451
3,868,928
940,150
1,075,683
1,089,176
1,013,883
9,134,081
384,075
86,630
431,316
83,150
431,316
65,869
453,748
4,087,820
66,195
596,351
Consolidated total
¥ 4,323,041 ¥ 4,394,353 ¥ 4,238,666 ¥ 4,431,198
¥ 4,444,424 ¥ 4,519,921
$ 40,720,009
Japan
Revenue increased by 5% year on year to ¥2,556.6 billion primarily due to increases in the social infrastructure systems,
automotive equipment and air conditioner businesses.
North America
Despite a decrease in the automotive equipment business, revenue increased by 2% year on year to ¥429.4 billion primarily
due to increases in the social infrastructure systems, factory automation systems and air conditioner businesses.
Asia (excluding Japan)
Revenue decreased by 7% year on year to ¥1,013.8 billion primarily due to decreases in the factory automation systems,
electronic devices and air conditioner businesses.
In China, revenue decreased by 11% year on year to ¥486.4 billion primarily due to decreases in the social infrastructure
systems, electronic devices and air conditioner businesses.
Europe
Revenue increased by 5% year on year to ¥453.7 billion primarily due to increases in the social infrastructure systems,
automotive equipment and air conditioner businesses.
Others
Revenue in other regions, including Oceania, was flat year on year at ¥66.1 billion.
RESULTS BY GEOGRAPHIC SEGMENT
45
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 RESEARCH AND DEVELOPMENT
R&D Expenditures
Years ended March 31
Energy and Electric
Systems
Industrial Automation
Systems
Information and
Communication Systems
Electronic Devices
Home Appliances
Others
Consolidated total
R&D expenditures
/revenue (％)
U.S. GAAP
Yen (billions)
IFRS
2015
2016
2017
2018
2018
2019
U. S. dollars
(millions)
IFRS
2019
¥
31.4 ¥
33.7 ¥
35.5 ¥
35.4
¥
35.4 ¥
34.7
$
312.9
70.5
16.3
10.9
37.3
28.6
70.8
18.9
10.6
39.8
28.7
66.4
18.2
10.0
41.1
29.7
69.5
17.9
13.4
41.8
32.2
69.5
17.9
13.4
41.8
32.2
70.8
15.3
14.1
43.8
33.9
638.1
138.4
127.1
394.9
305.7
¥
195.3 ¥
202.9 ¥
201.3 ¥
210.3
¥
210.3 ¥
212.7
$
1,917.1
4.5
4.6
4.7
4.7
4.7
4.7
－
As the cornerstone of its growth strategy, the Mitsubishi Electric Group will promote short-, medium-, and long-term R&D
themes in a balanced manner.
In addition to promoting development toward strengthening current businesses and achieving innovation, the Group is
striving to create further value through synergy of technologies and businesses by leveraging the Group’s diverse
technologies and businesses, while also working to realize sustainable growth through the development of future
technologies.
To support these efforts, the Group is developing common basic technologies that are the source of the competitive
advantages of the Group’s products, on a continuous basis.
Furthermore, the Group will promote enhancement of efficiency of development through proactive utilization of open
innovation in collaboration with universities and other external R&D institutions.
During fiscal 2019, the total R&D expenses for the entire Group have amounted to 212.7 billion yen (1% increase
compared to the previous fiscal year). The main R&D achievements for each business segment are as follows.
In the Energy and Electric Systems segment, our research is directed at boosting the competitiveness of core products,
including such rotating machinery as generators and electric motors; such power transmission/distribution equipment and
systems as switchgears and transformers; transportation systems; and elevators and escalators. Other R&D areas include
IT-application systems for supervision and control, power information systems, building management systems, and visual
information systems. The R&D expenditures for these fields were 34.7 billion yen and the main achievements are as follows.
1) Gas-insulated Switchgear Technologies for Electric Power Applications
The Group has developed two technologies for gas-insulated switchgears: an arc-cooling technology that achieves a
25 percent improvement in the interruption of electrical current in sulfur-hexafluoride (SF6
*1) gas-insulated switchgears
used in high-voltage power systems, and a high-density dielectric coating technology that improves insulation
performance by 30 percent in high-voltage conductors. The two technologies will contribute to the further
miniaturization of switchgears and help to reduce the use of SF6 gas, which has a high global-warming potential.
2) Train Information Monitoring and Analysis System “TIMA” for Railway Companies
The Group has developed a system that makes full use of IoT technology, allowing visualization and analysis of
information on trains in service collected by the Group’s brand new Train-control Information Management System.
The new system makes full use of big-data to contribute to improvement of passenger service, faster responses to
operational problems, as well as optimization of the timing of inspection and parts replacement for extra-safe and
reliable train operations.
3) Passive Rope-sway Control Device for Elevators in High-rise Buildings
The Group has developed a device that passively controls rope sway when high-rise building elevator sway due to
strong winds or long-period earthquakes. By enabling elevators to continue operating under such conditions, the new
device will help to stabilize elevator operations and contribute to greater user convenience.
46
RESEARCH AND DEVELOPMENT
Financial ReviewMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 In the Industrial Automation Systems segment, R&D activities are aimed at enhancing the competitiveness of our
lineup, which includes FA control equipment and systems; drive products, such as AC servo motor systems; power
distribution and control equipment; mechatronics equipment; industrial robots; automotive electric and electronic
components, including electric power steering (EPS) and related products; car multimedia systems; and automated
driving, accident avoidance, and driving assistance systems. The R&D expenditures for these fields were 70.8 billion yen
and the main achievements are as follows.
1) MELIPC Series Industrial-use Computers
The Group has developed a total of five MELIPC series industrial-use computer models for FA control applications
and edge computing: the flagship MI5000, two MI3000 models, which are panel computers with integrated touch
screens, the midrange MI2000 and the compact, low-cost MI1000. By collecting real-time data from the production
area, linking it with IT systems and allowing the visualization of various types of data, the computers enable the
introduction of IoT to the factory floor, thus helping to improve productivity.
2) Driver Monitoring System (DMS)
The Group has installed the functionality of individual-recognition judgment in DMS, which uses a camera to monitor
both the driver and the front passenger. By identifying each individual, the onboard HMI (Human Machine Interface)
and the device settings can be optimized for the users. This contributes to peace-of-mind, safety and convenience
by providing comfortable driving environments.
In the Information and Communication Systems segment, the Group pursues research related to the development of
information and communications infrastructure, network solutions equipment, and space systems. The R&D expenditures
for these fields were 15.3 billion yen and the main achievements are as follows.
1) “MMS-G” Mobile Mapping System
The Group has developed the new version of mobile mapping system (MMS), a highly precise 3D mobile measuring
system used to create high-definition 3D maps for autonomous driving and infrastructure inspections. This version is
now more compact and lightweight, making it easy to transport, install and remove, suited to various measuring
purposes, including mounted on automobiles, railways, ships or carts etc.
2) Mitsubishi Communication Gateway for IoT Systems “Extended-temperature IoT GW”
The Group has developed the new Extended-Temperature IoT GW that can be installed horizontally. Based on the
standard IoT GW commercialized in 2017, while keeping the wireless WAN (Wide Area Network) communication
feature and SD card slot, the operating temperature has been extended to 55 degrees C.
3) Electronic Signature Cloud Service “MELSIGN”
The Group developed a function that enables online signature and tamper detection for electronic medical
documents using the HPKI (Healthcare Public Key Infrastructure) card, and launched the service as the electronic
signature cloud service “MELSIGN.”
In the Electronic Devices segment, our R&D focuses on semiconductor and other electronic devices that are
themselves vital components used in all our business segments. The R&D expenditures for these fields were 14.1 billion
yen and the main achievements are as follows.
1) High-Performance Power Semiconductor Modules
The Group has developed “MISOP,” a surface-mount package IPM equipped with the latest 7th generation Si chip
that supports reflow soldering, as well as the “3.3kV full SiC power module” that contributes to loss reduction and
downsizing of inverter systems.
2) Optical and High Frequency Devices for 5th Generation Mobile Communication System Base Stations
The Group has developed the optical communication device “25 Gbps EML CAN” that contributes to achieving high-
speed, high-capacity and low-power consumption of mobile communication systems, and the “ultra-wideband
digitally controlled GaN amplifier,” one device capable of supporting multiple frequency bands.
RESEARCH AND DEVELOPMENT
47
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 In the Home Appliances segment, the Group is engaged in the development of products in such wide-ranging fields as
air conditioning equipment, kitchen appliances, vacuum cleaners, lighting, visual information systems, electronic housing
products, and photovoltaic systems. The R&D expenditures for these fields were 43.8 billion yen and the main
achievements are as follows.
1) Mitsubishi Room Air Conditioner “Kirigamine FZ Series”
The “Kirigamine FZ Series” provides even more comfort and an improved energy saving feature through the updated
“Automatic AI Mode,” which automatically switches to the optimal mode of operation and style of air flow by
predicting changes in temperature and humidity about to occur in the room. The Mitsubishi room air conditioner
“Kirigamine FZ Series” has won the 1st Eco Pro Awards and the 2018 Energy Conservation Grand Prize for its
improved energy saving features.
2) Lightweight High Dust-Absorbing Cordless Stick Vacuum Cleaner
The Group has developed the cordless stick vacuum cleaner HC-JXH “iNSTICK ZUBAQ” equipped with the high
performance brushless DC blower motor “JC Motor,” that despite its small size, achieves high power through 125
thousand revolutions per minute while still keeping industry-leading high efficiency*2. By equipping the “JC Motor,”
the stick vacuum cleaner achieves both high dust absorption performance and weight reduction.
In the area of cutting-edge R&D, the Group has been promoting R&D for cutting-edge technology in order to create
customer value by solving social issues. The R&D expenditures for these fields were 33.9 billion yen and the main
achievements are as follows.
1) New Dot Forming Technology that Achieves High-precision Three-dimensional Metal Shaping
The Group has developed a unique dot forming technology that realizes high-precision shaping by combining laser,
computer numerical control and computer aided manufacturing CAM*3 technologies in 3D printers. The technology
produces high-quality three-dimensional parts with few voids at high speed, employing a laser wire DED*4 method.
With this new technology, the shape accuracy has improved by 60% (in-house comparison) compared to that of
conventional consecutive forming technology.
2) High-performance Injection-molded-resin Slotted Waveguide Array Antenna
The Group has developed*5 a slotted waveguide array antenna made of injection-molded resin that uses a
manufacturing approach that combines resin-molding and plating. The antenna achieves industry-leading
performance*6 thanks to its proprietary structure, as well as being lightweight and low-cost. The Group is now
working to commercialize the antenna for use in a wide range of fields, such as weather radar, air traffic control
radar, surface observation radar, and satellite communication antennas.
3) Seamless Speech Recognition Technology
Using its proprietary Maisart*7 AI technology, the Group developed “Seamless Speech Recognition,” the world’s
first*8 technology capable of highly accurate multilingual speech recognition without being informed which language
is being spoken. The technology can understand multiple people speaking either the same or different languages
simultaneously.
4) Interpolation Technology for 3D Measurement Data
The Group has developed technology that complements missing sections of measurement data in order to utilize the
measurement data from 3D scanners in the design phase. This technology facilitates the design of maintenance
parts by making it possible to use computers to accurately extract the dimensions of other companies’ older
equipment whose drawings cannot be procured.
*1 Sulfur hexafluoride. It has a high environmental impact with a global warming potential 22,800 times higher than CO2
*2 According to the Company’s research on April 5, 2018, targeting applications in household cordless cleaner
*3 CAM (Computer Aided Manufacturing): A technology that uses input three-dimensional shape data to perform all production
preparations, such as the creation of processing programs, on a computer
*4 DED (Directed Energy Deposition): An additive-manufacturing process that uses focused thermal energy to fuse materials as they are
deposited, and add layer by layer to solidify.
*5 The development received support from the Japan Science and Technology Agency’s A-STEP program under a project entitled
“Development of a novel resin ridge waveguide antenna with eminent low sidelobe”
*6 As of January 25, 2019, in comparison to conventional patch array antenna (based on the Company’s research)
*7 Mitsubishi Electric’s AI creates the State-of-the-ART in technology
Mitsubishi Electric’s AI technology brand aimed at making every device smarter
*8 As of February 13, 2019 (based on the Company’s research)
48
RESEARCH AND DEVELOPMENT
Financial ReviewMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
FINANCIAL POSITION
Total assets as of the end of this fiscal year increased from the end of the previous fiscal year by 50.6 billion yen to 4,356.2
billion yen. The change in the balance of total assets was mainly due to increases in the balance of inventories by 82.8
billion yen, in contract assets by 26.7 billion yen, and in trade receivables by 15.5 billion yen, while cash and cash
equivalents decreased by 84.9 billion yen.
Total liabilities decreased from the end of the previous fiscal year by 63.3 billion yen to 1,845.0 billion yen. The
outstanding balances of bonds and borrowings decreased by 13.5 billion yen from the end of the previous fiscal year to
298.4 billion yen, resulting in a decline in the ratio of bonds and borrowings to total assets to 6.9%, representing a 0.3 point
decrease compared to the end of the previous fiscal year. Meanwhile, trade payables decreased by 19.9 billion yen, and
contract liabilities decreased by 15.0 billion yen.
Mitsubishi Electric Corporation stockholders’ equity increased by 105.7 billion yen compared to the end of the previous
fiscal year to 2,399.9 billion yen. The stockholders’ equity ratio was recorded at 55.1%, representing a 1.8 point increase
compared to the end of the previous fiscal year. The changes referred to above primarily resulted from an increase from
recording a net profit attributable to Mitsubishi Electric Corporation stockholders of 226.6 billion yen, despite a decrease
due to dividend payment of 85.8 billion yen and a decrease in other comprehensive income of 45.6 billion yen reflecting a
fall in stock prices and the stronger yen.
FINANCIAL POSITION
49
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 CAPITAL EXPENDITURES
Years ended March 31
2015
2016
2017
2018
2018
2019
U.S. GAAP
Yen(millions)
IFRS
U.S.dollars
(thousands)
IFRS
2019
Energy and Electric Systems
¥
36,119 ¥
39,456 ¥
39,574 ¥
30,861
¥
30,861 ¥
27,165
$
244,730
Industrial Automation Systems
Information and Communication Systems
Electronic Devices
Home Appliances
Others
Commons
54,238
20,850
21,363
40,258
7,312
14,318
54,653
17,366
15,458
31,448
3,300
16,120
60,233
16,599
9,485
36,295
4,122
9,234
68,376
17,522
17,197
32,849
4,758
9,950
68,376
17,522
17,197
32,849
4,758
9,950
79,257
21,925
21,072
31,199
7,437
10,387
714,027
197,522
189,838
281,072
67,000
93,577
Consolidated total
¥
194,458 ¥
177,801 ¥
175,542 ¥
181,513
¥
181,513 ¥
198,442
$
1,787,766
* The data above are based on the recognaized value of property, plant and equipment.
In line with its policy of improving performance by implementing the Balanced Corporate Management Policy and pursuing
sustainable growth, the Mitsubishi Electric Group aims to realize its growth strategies as it increases profitability. To that
end, the Group directed its capital investment mainly toward the areas of energy and electric systems, factory automation
equipment, automotive equipment, power devices, and air conditioning equipment. At the same time the Group continued to
reinforce its solid business platform through the careful selection and concentration of investments.
On an individual business segment basis, investments were made in Energy and Electric Systems (including power
systems, electric equipment for rolling stock, and elevators/escalators) aimed at streamlining operations, and enhancing
quality. In Industrial Automation Systems, capital expenditures were used primarily for boosting production capacity for
factory automation systems and automotive equipment operations. In Information and Communication Systems, funds were
appropriated for bolstering research and development capabilities,and streamlining operations, while in Electronic Devices,
Mitsubishi Electric directed investment mainly toward augmenting production in the power device business.In Home
Appliances, expenditures focused largely on increasing the air conditioners production capacity, streamlining operations,
and enhancing quality. In Common and Others, investments mainly went toward boosting research and development
capabilities.
Capital expenditures are derived from cash on hand and funds from operations. For this fiscal year, production capacity
was not materially affected by the sale, disposal, damage, or loss due to natural disaster of property, plant and equipment.
CASH FLOWS
In the fiscal year ended March 31, 2019, cash flows from operating activities was ¥239.8 billion, while cash flows from
investing activities was ¥210.6 billion. As a result, free cash flow was an inflow of ¥29.1 billion, down ¥54.6 billion compared
to the previous fiscal year. Taking this into account along with other factors, including cash flows from financing activities of
¥112.0 billion, fiscal year-end cash and cash equivalents amounted to ¥514.2 billion, a decrease of ¥84.9 billion year on
year.
Net cash provided by operating activities decreased by ¥25.9 billion compared to the previous fiscal year. This downturn
was largely attributable to a decrease in net profit and an increase in contract assets, despite a decrease in the payments
made for trade payables.
Net cash used in investing activities increased by ¥28.6 billion year on year, due mainly to a decrease in proceeds from
sale of investment securities.
Net cash used in financing activities decreased by ¥37.7 billion year on year, due mainly to an increase in proceeds from
bonds and long-term borrowings, despite an increase in dividend payments.
50
CAPITAL EXPENDITURES、CASH FLOWS
Financial ReviewMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Capital Resources and Funding Liquidity
It is the policy of the Mitsubishi Electric Group to secure procurement capacity of funds for growth, while maintaining a solid
balance sheet.
The main component within the need for working funds is operating expenses such as costs for purchasing necessary
materials for production, manufacturing costs and selling, general and administrative expenses. The need for funds for
investment is due to components such as capital expenditure and M&As.
Short-term working funds are derived from cash on hand and short-term borrowings from financial institutions. Capital
expenditure and long-term working funds are derived from long-term borrowings from financial institutions and issuance of
corporate bonds while utilizing cash on hand.
At the end of fiscal 2019, the balance of cash and cash equivalents totaled ¥514.2 billion and the balance of bonds and
borrowings totaled ¥298.4 billion. In detail, short-term borrowings totaled ¥55.5 billion, issuance of corporate bonds and
long-term borrowings totaled ¥220.3 billion and lease obligations totaled ¥22.4 billion. In addition, the Group had unused
committed lines of credit that can provide short-term funds from subscribing financial institutions amounting to ¥82.7 billion.
Capital Resources and Funding Liquidity
51
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Status of Stocks Held
1) Criteria and Approach on Classification of Stocks for Investment
With regard to the classification of stocks for investment held for pure investment purposes and stocks for investment
held for purposes other than pure investment purposes, the Company classifies stocks held solely for profit purposes
from changes in the stock value or dividends on stock as pure investment. There are no stocks held solely for pure
investment.
2) Stocks for Investment Held for Purposes Other Than Pure Investment Purposes
a. The Holding Policy, and the Method for Verifying the Reasonableness of Holding and the Outline of the Verifications
Regarding the Propriety of Individually Held Stocks at the Meetings of the Board of Directors and others.
The Company holds stocks that are determined to be necessary for business operations, taking into consideration
maintaining and strengthening relationships with business partners. The Company comprehensively judges whether
or not stocks held are significant, from the viewpoint of their profitability, bussiness feasibility, holding risks, etc.,
aspects which are verified and confirmed yearly in the Executive Officers’ meeting and in the Board of Directors’
meeting. Furthermore, the Company performs verifications with regard to profitability, as to whether the income
gained from related businesses and total dividends received are reaching a level above the capital cost, with regard to
business feasibility whether there are not any significant changes in business relationships or amounts of
transactions, etc., and with regard to holding risks, whether the corporate value of the investee has fallen or not.
When stocks are thus judged to have a low holding significance, the Company considers reduction such as by selling
them, taking into consideration the situation of the concerned company.
Based on the results of the above verifications, the Company sold a part of its held stocks in the current fiscal year.
b. Number of Issues and Amount on the Balance Sheet
Number of
issues
(issues)
Total amount on the balance
sheet
(millions of yen)
Unlisted stocks
Stocks other than unlisted
stocks
188
127
13,172
189,840
(Issues whose number of shares increased in the current fiscal year)
Number of
issues
(issues)
Total purchase price for the
increased number of shares
(millions of yen)
Reasons for the increased number of shares
Unlisted stocks
Stocks other than unlisted
stocks
3
9
395
534
Number of shares increased due to acquisition of shares
with the aim of maintaining and strengthening business
relationships
Number of shares increased due to acquisition of shares
with the aim of maintaining and strengthening business
relationships
(Issues whose number of shares decreased in the current fiscal year)
Number of
issues
(issues)
Total selling price for the
decreased number of shares
(millions of yen)
Unlisted stocks
Stocks other than unlisted
stocks
17
10
452
7,016
Note: The figures in the table above are on a non-consolidated basis of the Company.
52
Status of Stocks Held
Financial ReviewMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 c. Number of Shares of Specified Investment Stocks and Deemed Stockholdings per Issue and the Amount on the
Balance Sheet, and others
Specified Investment Stocks
Fiscal Year Ended March 31, 2018
Fiscal Year Ended March 31, 2019
Issue
Number of shares
(thousands of
shares)
Amount on the
Statement of
Balance Sheet
(millions of yen)
Number of shares
(thousands of
shares)
Amount on the
Statement of
Balance Sheet
(millions of yen)
Shares
held by
each
company
Renesas Electronics Corporation
SUZUKI MOTOR CORPORATION
Central Japan Railway Company
East Japan Railway Company
Mitsubishi Heavy Industries, Ltd.
Mitsubishi Materials Corporation
Mitsubishi Estate Company, Limited
Shimadzu Corporation
Shin-Etsu Chemical Co., Ltd.
RYOYO ELECTRO CORPORATION
TAKEBISHI CORPORATION
TACHIBANA ELETECH CO., LTD.
The Kansai Electric Power Company, Incorporated
Mitsubishi Research Institute, Inc.
Citizen Watch Co., Ltd.
TEIKOKU ELECTRIC MFG. CO., LTD.
Hankyu Hanshin Holdings, Inc.
Mitsubishi Logistics Corporation
SOHGO SECURITY SERVICES CO., LTD.
JEOL Ltd.
Mitsubishi Gas Chemical Company, Inc.
Keisei Electric Railway Co., Ltd.
THE SHIZUOKA BANK, LTD.
AGC Inc.
RYOBI LIMITED
The Chugoku Electric Power Company, Incorporated
KDDI CORPORATION
Tohoku Electric Power Company,
Incorporated
75,706
4,105
770
958
1,394
1,458
2,003
1,250
406
2,246
2,340
1,921
1,957
902
3,523
2,286
551
733
455
2,000
1,133
440
2,033
441
660
1,161
632
1,056
81,006
23,524
15,512
9,448
5,679
4,668
3,602
3,741
4,475
3,891
4,027
4,048
2,676
3,026
2,692
3,571
2,177
1,656
2,393
1,958
2,888
1,440
2,045
1,942
1,849
1,488
1,717
1,500
75,706
4,105
770
958
1,394
1,458
2,003
1,250
406
2,246
2,340
1,921
1,957
902
4,317
2,286
551
733
455
1,000
1,133
441
2,033
441
660
1,161
632
1,056
38,761
No
20,108
19,812
10,232
6,410
4,262
4,017
4,001
3,774
3,635
3,306
3,195
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
3,194
No
3,017
2,664
2,569
2,290
2,264
2,193
1,992
1,789
1,772
1,714
1,711
1,639
1,603
1,508
1,491
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
No
Status of Stocks Held
53
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Specified Investment Stocks
Fiscal Year Ended March 31, 2018
Fiscal Year Ended March 31, 2019
Issue
Number of shares
(thousands of
shares)
Amount on the
Statement of
Balance Sheet
(millions of yen)
Number of shares
(thousands of
shares)
Amount on the
Statement of
Balance Sheet
(millions of yen)
Shares
held by
each
company
Sekisui House, Ltd.
Tokyo Electric Power Company Holdings, Incorporated
NIPPON STEEL & SUMITOMO METAL
CORPORATION
Keikyu Corporation
JFE Holdings, Inc.
OSAKA GAS CO., LTD.
749
1,924
643
663
640
509
Mitsubishi Chemical Holdings Corporation
1,399
Keio Corporation
KAGA ELECTRONICS CO., LTD.
Mazda Motor Corporation
KYOEI SANGYO CO., LTD.
AISAN TECHNOLOGY CO., LTD.
Chubu Electric Power Company,
Incorporated
SEIBU HOLDINGS INC.
YAMADA DENKI CO., LTD.
NARASAKI SANGYO CO., LTD.
AEON CO., LTD.
SUMITOMO CORPORATION
Sumitomo Mitsui Trust Holdings, Inc.
EDION Corporation
TAISEI CORPORATION
TODA CORPORATION
PIONEER CORPORATION
Kirin Holdings Company, Limited
Oi Electric Co., Ltd.
SEIKA CORPORATION
K’S HOLDINGS CORPORATION
Mebuki Financial Group, Inc.
*
500
710
558
350
*
419
1,485
2,096
*
448
*
597
*
*
27,886
1,592
2,472
286
259
1,818
1,454
789
1,504
1,226
1,373
1,069
1,441
*
1,380
998
1,092
1,100
*
776
947
842
*
803
*
739
*
*
4,908
4,511
830
762
762
743
749
1,924
643
664
640
509
1,399
147
500
710
558
350
478
419
1,485
419
318
448
150
597
109
820
-
-
*
*
*
*
1,372
1,347
No
No
1,257
Yes
1,247
No
1,203
Yes
1,112
No
1,090
1,052
1,016
879
877
846
827
812
810
788
737
686
596
577
561
557
-
-
*
*
*
*
Yes
Yes
No
No
Yes
No
No
No
No
Yes
No
Yes
Yes
No
Yes
Yes
No
Yes
Yes
Yes
No
Yes
54
Status of Stocks Held
Financial ReviewMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Notes: 1 As it involves trade secrets, the Company will not disclose the quantitative effect of stocks held. However, the Company
comprehensively judges whether or not stocks held are significant, from the viewpoint of each issue’s profitability, feasibility,
holding risks, etc., aspects which are verified and confirmed yearly in the Executive Officers’ meeting and in the Board of
Directors’ meeting. Furthermore, we perform verifications with regard to profitability, as to whether the income gained from related
businesses and total dividends received are reaching a level above the capital cost, with regard to business feasibility whether
there aren’t any significant changes in business relationships or amounts of transactions, etc., and with regard to holding risks,
whether the corporate value of the investee has fallen or not.
2 “-” signifies that the Company does not own shares of the issue.
3 “*” signifies that the figures are not displayed because the amount on the balance sheet of the issue is less than 1/100 of the
Company’s capital amount and the issue’s amount on the balance sheet is less than the top 50 issues displayed.
4 The meaning of “Yes” in the “Shares held by each company” column includes shares held by operating subsidiaries under holding
companies.
5 NIPPON STEEL & SUMITOMO METAL CORPORATION has changed its company name to NIPPON STEEL CORPORATION
as of April 1, 2019.
6 The figures in the table above are on a non-consolidated basis of the Company.
Deemed Stockholdings
The Company has contributed own shares to an employee retirement benefit trust, of which the Company has the
power to instruct exercise of voting rights.
Fiscal Year Ended March 31, 2018
Fiscal Year Ended March 31, 2019
Issue
Number of shares
(thousands of
shares)
Amount on the
Statement of
Balance Sheet
(millions of yen)
Number of shares
(thousands of
shares)
Amount on the
Statement of
Balance Sheet
(millions of yen)
Shares
held by
each
company
Mitsubishi Corporation
Odakyu Electric Railway Co., Ltd.
Mitsubishi UFJ Financial Group, Inc.
OBIC Co., Ltd.
Tokio Marine Holdings, Inc.
Mitsubishi Estate Company, Limited
Mitsubishi Heavy Industries, Ltd.
TIS Inc.
Central Japan Railway Company
NTT DOCOMO, INC.
17,768
12,908
44,121
2,160
3,219
6,390
2,408
1,598
219
1,625
50,852
27,790
30,752
19,116
15,244
11,492
9,810
6,731
4,408
4,414
17,768
12,908
44,121
2,160
3,219
6,390
2,408
1,598
219
1,625
54,618
34,632
24,266
24,105
17,262
12,815
11,072
8,378
5,630
3,983
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Notes: 1 In regard to the quantitative effects of stocks held, as part of management of the trust accounts for retirement benefits, the
Company makes sure that there are stable yields to investments, to be used as a source of payment of retirement benefits in the
future.
2 The meaning of “Yes” in the “Shares held by each company” column includes shares held by operating subsidiaries under holding
companies.
3 The figures in the table above are on a non-consolidated basis of the Company.
Status of Stocks Held
55
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Mitsubishi Electric Corporation and Subsidiaries
The date of transition to IFRS (April 1, 2017), March 31, 2018 and 2019
Notes
Date of transition
to IFRS
(April 1, 2017)
Yen (millions)
U.S. dollars
(thousands)
2018
2019
2019
(Assets)
Cash and cash equivalents
¥
662,469
¥
599,199
¥
514,224
$
4,632,649
Trade receivables
7,28,30
899,678
922,667
938,264
Contract assets
23,28,30
255,788
268,862
295,652
Other financial assets
Inventories
Other current assets
8,28
9
39,801
47,581
48,768
559,902
646,262
729,098
6,568,450
90,919
98,164
98,287
885,468
8,452,829
2,663,532
439,351
Current assets
2,508,557
2,582,735
2,624,293
23,642,279
Investments accounted for using the
equity method
13
187,358
194,308
197,959
1,783,414
Other financial assets
Property, plant and equipment
Goodwill and intangible assets
Deferred tax assets
Other non-current assets
Non-current assets
Total assets
8,28
10,12
11,12
14
19
390,579
363,171
303,834
699,478
724,257
760,540
124,582
132,960
137,615
273,485
242,698
233,087
53,991
65,451
98,883
2,737,243
6,851,712
1,239,775
2,099,883
890,838
1,729,473
1,722,845
1,731,918
15,602,865
¥
4,238,030
¥
4,305,580
¥
4,356,211
$
39,245,144
56
Consolidated Statement of Financial Position
Consolidated Statement of Financial PositionMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Notes
Date of transition
to IFRS
(April 1, 2017)
Yen (millions)
U.S. dollars
(thousands)
2018
2019
2019
(Liabilities)
Bonds and borrowings
15,17,28 ¥
146,355
¥
122,895
¥
104,969
$
945,667
Trade payables
Contract liabilities
Other financial liabilities
Accrued expenses
Accrued income taxes
Provisions
Other current liabilities
18,30
23,30
16,28
14
20
19
635,083
579,566
559,641
150,610
153,922
138,877
169,993
165,346
159,579
248,358
261,392
268,651
26,295
33,179
24,298
130,183
117,357
106,006
59,422
54,592
54,314
5,041,811
1,251,144
1,437,649
2,420,279
218,901
955,009
489,315
Current liabilities
1,566,299
1,488,249
1,416,335
12,759,775
Bonds and borrowings
15,17,28
227,756
189,055
193,469
Net defined benefit liabilities
Provisions
Deferred tax liabilities
Other non-current liabilities
Non-current liabilities
Total liabilities
(Equity)
Common stock
Capital surplus
Retained earnings
19
20
14
21
21
21
203,034
171,520
176,087
11,284
12,862
49,832
5,856
9,137
44,544
6,905
10,164
42,096
1,742,964
1,586,369
62,207
91,568
379,243
504,768
420,112
428,721
3,862,351
2,071,067
1,908,361
1,845,056
16,622,126
175,820
175,820
175,820
1,583,964
198,745
199,442
202,834
1,827,333
1,593,660
1,811,348
1,960,466
17,661,856
Accumulated other comprehensive
income (loss)
14,19,
21,28
101,166
109,492
63,809
574,856
Treasury stock, at cost
21
(1,228)
(1,928)
(2,983)
(26,874)
Mitsubishi Electric Corp. stockholders'
equity
2,068,163
2,294,174
2,399,946
21,621,135
Non-controlling interests
98,800
103,045
111,209
1,001,883
Total equity
2,166,963
2,397,219
2,511,155
22,623,018
Total liabilities and equity
¥
4,238,030
¥
4,305,580
¥
4,356,211
$
39,245,144
Consolidated Statement of Financial Position
57
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Mitsubishi Electric Corporation and Subsidiaries
Years ended March 31, 2018 and 2019
Revenue
Cost of sales
Selling, general and administrative expenses
Other profit (loss)
Operating profit
Financial income
Financial expenses
Share of profit of investments
accounted for using the equity method
Profit before income taxes
Income taxes
Net profit
Net profit attributable to:
Notes
2018
Yen (millions)
2019
U.S. dollars
(thousands)
2019
23,30
¥ 4,444,424
¥ 4,519,921
$
40,720,009
9,10,11,
17,19
10,11,
17,19
3,090,449
3,186,869
28,710,532
1,021,361
1,043,294
9,399,045
12,24,28
(5,170)
719
6,478
25
25
13
14
327,444
290,477
2,616,910
8,611
6,796
9,747
4,382
87,811
39,477
23,947
20,116
181,224
353,206
315,958
2,846,468
86,807
78,304
705,441
266,399
237,654
2,141,027
Mitsubishi Electric Corp. stockholders
27
255,755
226,648
2,041,874
Non-controlling interests
¥
10,644
¥
11,006
$
99,153
Earnings per share (attributable to
Mitsubishi Electric Corp. stockholders)
Basic
Diluted
27
¥
119.19 ¥
105.65
$
0.952
Yen
U.S. dollars
27
119.19
105.65
0.952
58
Consolidated Statement of profit or loss
Consolidated Statement of Profit or LossMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Mitsubishi Electric Corporation and Subsidiaries
Years ended March 31, 2018 and 2019
Net profit
¥
266,399
¥
237,654
$
2,141,027
Notes
2018
Yen (millions)
2019
U.S. dollars
(thousands)
2019
Other comprehensive income (loss), net of tax
Items that will not be reclassified to net profit
Changes in fair value of financial assets measured at
fair value through other comprehensive income
Remeasurements of defined benefit plans
Share of other comprehensive income of investments
accounted for using the equity method
28
19
13
(52)
(39,284)
(353,910)
21,323
12,234
110,216
170
(995)
(8,964)
Total items that will not be reclassified to net profit
21,441
(28,045)
(252,658)
Items that may be reclassified to net profit
Exchange differences on translating foreign operations
16,992
(6,756)
(60,865)
Net changes in the fair value of cash flow hedges
Share of other comprehensive income of investments
accounted for using the equity method
Total items that may be reclassified to net profit
Total other comprehensive income (loss)
28
13
26
(71)
(37)
(333)
1,869
(2,645)
(23,828)
18,790
(9,438)
(85,026)
40,231
(37,483)
(337,684)
Comprehensive income
306,630
200,171
1,803,343
Comprehensive income attributable to:
Mitsubishi Electric Corp. stockholders
294,710
189,306
1,705,460
Non-controlling interests
¥
11,920
¥
10,865
$
97,883
Consolidated Statement of Comprehensive Income
59
Consolidated Statement of Comprehensive IncomeMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Mitsubishi Electric Corporation and Subsidiaries
Years ended March 31, 2018 and 2019
2018
Mitsubishi Electric Corp. stockholders’ equity
Accumulated
other
comprehensive
income (loss)
Retained
earnings
Treasury
stock,
at cost
Yen (millions)
Total
Non-controlling
interests
Total equity
Notes Common stock
Capital surplus
Balance at beginning of
year
Comprehensive income
Net profit
Other comprehensive
income (loss),
net of tax
Comprehensive income
Reclassification to
retained earnings
Dividends
Purchase of treasury stock
Disposal of treasury stock
Transactions with non-
controlling interests and
others
26
8,
19
22
¥
175,820 ¥
198,745 ¥
1,593,660 ¥
101,166 ¥
(1,228) ¥
2,068,163 ¥
98,800 ¥
2,166,963
255,755
255,755
10,644
266,399
38,955
38,955
1,276
40,231
―
―
255,755
38,955
―
294,710
11,920
306,630
30,629
(30,629)
―
―
(68,696)
(68,696)
(7,085)
(75,781)
0
697
(700)
0
(700)
0
697
(700)
0
107
(590)
Balance at end of year
¥
175,820 ¥
199,442 ¥
1,811,348 ¥
109,492 ¥
(1,928) ¥
2,294,174 ¥
103,045 ¥
2,397,219
2019
Mitsubishi Electric Corp. stockholders’ equity
Accumulated
other
comprehensive
income (loss)
Retained
earnings
Treasury
stock,
at cost
Yen (millions)
Total
Non-controlling
interests
Total equity
Notes Common stock
Capital surplus
Balance at beginning of
year
Comprehensive income
Net profit
Other comprehensive
income (loss),
net of tax
Comprehensive income
Reclassification to
retained earnings
Dividends
Purchase of treasury stock
Disposal of treasury stock
Transactions with non-
controlling interests and
others
26
8,
19
22
¥
175,820 ¥
199,442 ¥
1,811,348 ¥
109,492 ¥
(1,928) ¥
2,294,174 ¥
103,045 ¥
2,397,219
226,648
226,648
11,006
237,654
(37,342)
(37,342)
(141)
(37,483)
―
―
226,648
(37,342)
―
189,306
10,865
200,171
8,341
(8,341)
(85,871)
―
(85,871)
(1,055)
0
(1,055)
0
(5,872)
―
(91,743)
(1,055)
0
3,392
3,171
6,563
0
3,392
Balance at end of year
¥
175,820 ¥
202,834 ¥
1,960,466 ¥
63,809 ¥
(2,983) ¥
2,399,946 ¥
111,209 ¥
2,511,155
60
Consolidated Statement of Changes in Equity
Consolidated Statement of Changes in EquityMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 2019
Mitsubishi Electric Corp. stockholders’ equity
Accumulated
other
comprehensive
income (loss)
Retained
earnings
Treasury
stock,
at cost
U.S. dollars (thousands)
Total
Non-controlling
interests
Total equity
Notes Common stock
Capital surplus
Balance at beginning of
year
Comprehensive income
Net profit
Other comprehensive
income (loss),
net of tax
Comprehensive income
Reclassification to
retained earnings
Dividends
Purchase of treasury stock
Disposal of treasury stock
Transactions with non-
controlling interests and
others
26
8,
19
22
$
1,583,964 $
1,796,774 $ 16,318,451 $
986,414 $
(17,369) $ 20,668,234 $
928,333 $ 21,596,567
2,041,874
2,041,874
99,153
2,141,027
(336,414)
(336,414)
(1,270)
(337,684)
―
―
2,041,874
(336,414)
―
1,705,460
97,883
1,803,343
75,144
(75,144)
―
―
(773,613)
(773,613)
(52,901)
(826,514)
0
30,559
(9,505)
(9,505)
0
0
(9,505)
0
30,559
28,568
59,127
Balance at end of year
$
1,583,964 $
1,827,333 $ 17,661,856 $
574,856 $
(26,874) $ 21,621,135 $
1,001,883 $ 22,623,018
Consolidated Statement of Changes in Equity
61
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Mitsubishi Electric Corporation and Subsidiaries
Years ended March 31, 2018 and 2019
Cash flows from operating activities
Net profit
Adjustments to cash flows from operating activities
Depreciation and amortization
Impairment losses
Loss (gain) from sales and disposal of property, plant and
equipment, net
Income taxes
Share of profit of investments accounted for using the equity
method
Financial income and financial expenses
Decrease (increase) in trade receivables
Decrease (increase) in contract assets
Decrease (increase) in inventories
Decrease (increase) in other assets
Increase (decrease) in trade payables
Increase (decrease) in net defined benefit liabilities
Increase (decrease) in other liabilities
Others, net
Subtotal
Interest and dividends received
Interest paid
Income taxes paid
Cash flows from operating activities
2018
Yen (millions)
2019
U.S. dollars
(thousands)
2019
¥ 266,399 ¥
237,654
$
2,141,027
177,272
4,202
(1,122)
86,807
176,247
2,645
369
78,304
(23,947)
(20,116)
(1,815)
(19,274)
(13,074)
(82,975)
(16,348)
(57,717)
(12,003)
(651)
(5,915)
299,839
26,611
(2,617)
(58,065)
265,768
(5,365)
(13,949)
(26,831)
(82,718)
(3,981)
(20,792)
(11,692)
(29,713)
8,843
288,905
24,788
(2,428)
(71,448)
239,817
1,587,811
23,829
3,324
705,441
(181,224)
(48,333)
(125,667)
(241,721)
(745,207)
(35,865)
(187,315)
(105,333)
(267,685)
79,667
2,602,749
223,315
(21,874)
(643,676)
2,160,514
Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities, net of cash acquired
Proceeds from sale of investment securities, net of cash disposed
Others, net
Cash flows from investing activities
(186,792)
(188,042)
(1,694,072)
3,005
(22,400)
(8,518)
35,194
(2,504)
4,170
(29,985)
(13,304)
11,824
4,669
37,568
(270,135)
(119,856)
106,523
42,062
(182,015)
(210,668)
(1,897,910)
Cash flows from financing activities
Proceeds from bonds and long-term borrowings
Repayment of bonds and long-term borrowings
Increase (decrease) in short-term borrowings, net
Dividends paid to Mitsubishi Electric Corp. stockholders
Purchase of treasury stock
Disposal of treasury stock
Dividends paid to non-controlling interests
Transactions with non-controlling interests
Cash flows from financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
20,180
(64,186)
(27,496)
(68,696)
(700)
0
(7,613)
(1,302)
77,604
(100,496)
(2,077)
(85,871)
(1,055)
0
(6,617)
6,445
(149,813)
(112,067)
2,790
(63,270)
662,469
(2,057)
(84,975)
599,199
699,135
(905,369)
(18,712)
(773,613)
(9,505)
0
(59,613)
58,063
(1,009,613)
(18,532)
(765,541)
5,398,190
¥ 599,199 ¥
514,224
$
4,632,649
62
Consolidated Statement of Cash Flows
Consolidated Statement of Cash FlowsMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Mitsubishi Electric Corporation and Subsidiaries
1．Reporting entity
Mitsubishi Electric Corporation (“the Company”) is an
entity located in Japan. The consolidated financial
statements of the Mitsubishi Electric Group ("the Group")
comprises the Company, its subsidiaries and equity in the
Company’s associates and joint ventures.
The Group is a multinational organization which
develops, manufactures, sells and distributes a broad
range of electrical and electronic equipment in the fields as
diverse as home appliances to space electronics. The
Company and its subsidiaries’ principal lines of business
are: (1) Energy and Electric Systems, (2) Industrial
Automation Systems, (3) Information and Communication
Systems, (4) Electronic Devices, (5) Home Appliances and
(6) Others. The Group’s manufacturing operations are
c o n d u c t e d p r i n c i p a l l y b y t h e C o m p a n y w i t h 2 3
manufacturing sites located in Japan, as well as overseas
manufacturing sites located in Thailand, China, the United
States, Mexico, Italy and other countries.
2．Basis of preparation
(1) Statement of consolidated financial statements in
accordance with IFRS
T h e G r o u p p r e p a r e s i t s c o n s o l i d a t e d f i n a n c i a l
statements in accordance with International Financial
Reporting Standards (“IFRS”) since the Group meets all
the requirements of a “specified international accounting
standard company” in Article 1-2 of the Ordinance of the
Ministry of Finance No. 28 of 1976, “Ordinance on
T e r m i n o l o g y , F o r m s a n d P r e p a r a t i o n M e t h o d s o f
Consolidated Financial Statements”, and therefore Article
93 of that Ordinance applies to the Group.
The Group has applied IFRS from the year ended March
31, 2019. The date of transition to IFRS is April 1, 2017.
Note “34. First-time adoption” describes how the transition
to IFRS affected the Group's reported financial position,
financial performance and cash flows at the date of
transition to IFRS and in the comparative consolidated
fiscal years.
3．Significant accounting policies
(1) Basis of consolidation
(a) Subsidiary
Subsidiaries are entities that are controlled by the
Company. The Company determines that it controls an
entity when it is exposed, or has rights, to variable returns
from its involvement with the entity and has the ability to
affect those returns through its power over the entity.
The subsidiary's financial statements are included in the
consolidation from the date the Company gains control to
the date when it ceases to control the subsidiary.
When the accounting policies used by a subsidiary differ
from those of the Group, the subsidiary’s financial
statements are adjusted as necessary. The balances of
receivables and payables among consolidated companies,
inter-company transactions, and unrealized gains and
losses arising from inter-company transactions are
eliminated upon preparation of the consolidated financial
statements.
Changes in the ownership interest in a subsidiary that do
not result in a loss of control are accounted for as equity
transactions.
If there are changes in the ownership interest in a
subsidiary that result in a loss of control, the gains or
losses resulting from the loss of control are recognized in
profit or loss.
(b) Associates and joint ventures
Associates are entities over which the Company has
significant influence, but not control or joint control in terms
of its financial and operating policies.
(2) Basis of measurement
The consolidated financial statements of the Group are
prepared using a historical cost basis except for certain
financial instruments, defined benefit obligations, and plan
assets that are measured at fair value and other items as
described in Note “3. Significant accounting policies.”
(3) Functional currency and presentation currency
The consolidated financial statements of the Group are
presented in Japanese yen, which is the Company’s
functional currency, rounded down in units of millions of
yen. In addition, for the convinience of the readers,
amounts in United States dollars at the rate of ￥111=U.S.
$1, which was the approximate exchange rate prevailing
on the Tokyo Foreign Exchange Market at the end of
March 2019, is also presented.
Joint ventures are investees where two or more parties
including the Company share the contractually agreed
control over economic activities and have rights to the net
asset of the investees under a joint arrangement which
requires the unanimous consent of the parties sharing
control when strategic financing and operating decisions
related to these activities are made.
Investments in associates and joint ventures are
accounted for using the equity method from the date when
significant influence or joint control is obtained to the date
when it is lost.
When the accounting policies applied by associates and
joint ventures differ from those applied by the Group, the
associates and joint ventures’ financial statements are
adjusted as necessary.
Gains or losses on discontinuation of application of the
equity method resulting from the loss of significant
influence on or joint control over associates and joint
ventures are recognized in profit or loss.
(2) Business combinations
Business combinations are accounted for by applying
the acquisition method.
Consideration for an acquisition is measured at the
aggregate of the fair value of assets transferred and
liabilities assumed, in exchange for control over an
acquiree, and equity instruments issued by the Company
and its consolidated subsidiaries as of the date when
control was obtained.
63
注記、Reporting entity、Basis of preparation、Significant accounting policies
Notes to Consolidated Financial StatementsMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
Non-controlling interests are measured at fair value or at
the net identifiable assets multiplied by the ratio of non-
controlling interest as of the date when control was
obtained, for each individual business combination.
If the aggregate of consideration for the acquisition,
recognized amount of the non-controlling interest and the
fair value as of the date when control was obtained of any
interest in the acquiree held before the date when control
was obtained exceeds the fair value of the identifiable
assets and liabilities, this excess is recognized as goodwill
in the Consolidated Statement of Financial Position. If the
aggregate is less than the fair value of the identifiable
assets and liabilities, this deficiency amount is recognized
immediately in profit or loss in the Consolidated Statement
of Profit or Loss.
Acquisition-related costs are accounted for as expenses
when incurred.
(3) Foreign currency translation
(a) Foreign currency transactions
Foreign currency transactions are translated into the
functional currencies of the Company and its consolidated
subsidiaries at the exchange rates at the date of the
transactions.
Foreign currency monetary assets and liabilities at the
end of the year are translated into functional currencies at
the exchange rate at the end of the year.
Foreign currency non-monetary assets and liabilities
measured at fair value are translated into functional
currencies using the exchange rate at the date when the
fair value was measured.
The exchange differences arising from translation or
settlement are recognized in profit or loss. However,
financial assets measured through other comprehensive
income and exchange differences arising from the effective
part of qualifying cash flow hedges are recognized in other
comprehensive income.
(b) Financial statements of a foreign operation
Assets and liabilities of a foreign operation are translated
into Japanese yen at the exchange rate at the end of the
year and, unless there are significant changes in foreign
exchange rates, income and expenses of a foreign
operation are translated into Japanese yen at the average
exchange rate prevailing during the year. Exchange
differences arising on the translation of the financial
statements of a foreign operation are recognized in other
comprehensive income. Cumulative exchange differences
on translating a foreign operation are reclassified to profit
or loss if a foreign operation is disposed and control,
significant influence and joint control are lost.
(4) Financial instruments
(a) Non-derivative financial assets
The Company and its consolidated subsidiaries classify
non-derivative financial assets as financial assets
measured at amortized cost or financial assets measured
at fair value through profit or loss or other comprehensive
income. This classification is determined at initial
recognition. Among financial assets, equity and debt
instruments are initially recognized on the commitment
date and all other financial assets are initially recognized
on the date of the transaction.
Among non-derivative financial assets, trade receivables
recognized in accordance with IFRS 15 are initially
measured at the transaction price, while others are initially
measured at fair value (after adding transaction costs
directly attributable to the financial assets).
(i) Financial assets measured at amortized cost
Financial assets are classified as financial assets
measured at amortized cost if both of the following
conditions are met:
- the financial assets are held within a business model
whose objective is to hold assets in order to collect
contractual cash flows; and
- the contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
Financial assets measured at amortized cost are
measured at the initial recognition amount plus or minus
accumulated amortization using the effective interest
method, adjusting allowance for credit losses.
(ii) Financial assets measured at fair value
Financial assets that are not measured at amortized cost
are measured at fair value. Financial assets measured at
fair value are classified in the following categories
according to the objective of holding the financial assets:
- Financial assets measured at fair value through other
comprehensive income
Equity instruments which are held primarily to maintain
and strengthen business relationships are designated as
financial assets measured at fair value through other
comprehensive income.
Changes in fair value after initial recognition of
financial assets measured at fair value through other
c o m p r e h e n s i v e i n c o m e a r e r e c o g n i z e d i n o t h e r
comprehensive income. However, dividends from
financial assets measured at fair value through other
comprehensive income are recognized as financial
income in profit or loss. When these financial assets are
derecognized, cumulative gains or losses previously
r e c o g n i z e d i n o t h e r c o m p r e h e n s i v e i n c o m e a r e
reclassified to retained earnings.
- Financial assets measured at fair value through profit or
loss
Financial assets that are not classified as financial
a s s e t s m e a s u r e d a t f a i r v a l u e t h r o u g h o t h e r
comprehensive income are classified as financial assets
measured at fair value through profit or loss.
Changes in fair value after initial recognition of
financial assets measured at fair value through profit or
loss are recognized in profit or loss.
(iii) Impairment of financial assets
Expected credit losses of financial assets measured at
amortized cost are recognized as allowances for credit
losses. Expected credit losses are the present value of the
difference between the cash flows that are due to the
Company and its consolidated subsidiaries in accordance
with the contract and the cash flows that the Company and
its consolidated subsidiaries expect to receive.
It is determined whether credit risk on a financial asset
has increased significantly since initial recognition. If it has
not increased significantly, allowance for credit losses is
measured at an amount equal to 12-month expected credit
losses.If it has increased significantly, allowance for credit
losses is measured at an amount equal to the lifetime
expected credit losses. When the fact of past due exist,
64
Significant accounting policies
Notes to Consolidated Financial StatementsMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 actual or anticipated significant changes in debtors’ results
of operations are considered in assessing whether the
credit risk on a financial asset has increased significantly
since initial recognition. For financial assets that fall under
any of the following categories, the possibility of credit
impairment is determined:
- significant financial difficulty of the issuer or the borrower;
- a breach of contract, such as a default or past due event;
or
- it is becoming probable that the borrower will enter
bankruptcy or other financial reorganization.
Regardless of the events above, the amount of
allowance for credit losses for trade receivables and
contract assets that do not contain a significant financing
component is measured at an amount equal to the lifetime
expected credit losses.
The amount of reversal in impairment losses are
recognized in profit or loss.
(iv) Derecognition of financial assets
The Company and its consolidated subsidiaries
derecognize financial assets if the contractual rights to the
cash flows from the financial asset expire, or the
contractual rights to receive the cash flows of the financial
a s s e t a r e t r a n s f e r r e d a n d t h e C o m p a n y a n d i t s
consolidated subsidiaries transfer substantially all the risks
and rewards of ownership of the financial asset.
(b) Non-derivative financial liabilities
The Company and its consolidated subsidiaries initially
measure non-derivative financial liabilities at fair value
(after deducting transaction costs directly attributable to the
financial liabilities) and measure them at amortized cost
using the effective interest method after initial recognition.
The Company and its consolidated subsidiaries
derecognize financial liabilities when they are extinguished,
that is, when the obligation specified in the contract is
discharged, canceled or expires.
(c) Derivatives and hedge accounting
The Company and its consolidated subsidiaries use
derivatives such as forward exchange contracts to hedge
foreign currency risks. These derivatives are initially
measured at fair value at the time that contracts are
entered into. They are subsequently remeasured at fair
value and resulting gains or losses are recognized in profit
or loss. However, the effective part of cash flow hedges is
recognized in other comprehensive income.
At the inception of the hedge, the Company and its
consolidated subsidiaries formally designate and document
the hedging relationship and the risk management
objective and strategy for undertaking the hedge. It is
assessed at the inception of the hedge and in subsequent
periods on an ongoing basis whether derivatives used for
hedging transactions are highly effective in offsetting
changes in cash flows of the hedged item.
Hedges that meet the qualifying criteria are accounted
for as follows:
(i) Cash flow hedges
The portion of the gain or loss on the hedging instrument
that is determined to be an effective hedge is recognized in
other comprehensive income in the Consolidated
Statement of Comprehensive Income. The ineffective
portion is recognized immediately in profit or loss in the
Consolidated Statement of Profit or Loss.
Amounts related to the hedging instrument that have
been recognized in other comprehensive income are
reclassified to profit or loss when hedged transaction
affects profit or loss.
(5) Cash and cash equivalents
Cash and cash equivalents are cash on hand and cash
in banks which can be withdrawn at any time. Cash and
cash equivalents are classified as financial assets
measured at amortized cost.
(6) Inventories
Inventories are measured at the lower of cost or net
realizable value. The costs of inventories comprise all
costs of purchase, costs of conversion and other costs
incurred in bringing the inventories to their present location
and condition. In determining the cost, work-in-progress for
build-to-ordered products are recorded under the specific
identification method and make-to-stock products are
recorded at the average production costs. Raw material
and finished goods inventories are generally recorded
using the average-cost method.
Net realizable value is the estimated selling price in the
ordinary course of business less the estimated costs of
completion and the estimated costs necessary to make the
sale.
(7) Property, plant and equipment
The cost model is used to measure property, plant and
e q u i p m e n t w h i c h a r e p r e s e n t e d a t c o s t l e s s a n y
a c c u m u l a t e d d e p r e c i a t i o n a n d a n y a c c u m u l a t e d
impairment losses.
Cost includes the costs directly related to the acquisition
of the asset as well as the costs of dismantling and
removing it and restoring the site.
Depreciation of property, plant and equipment is
generally calculated by the diminishing-balance method,
except for certain assets which are depreciated by the
straight-line method, over the estimated useful life of the
assets according to general assets classification, type of
construction, and use of these assets.
The estimated useful life of buildings is 3 to 50 years,
while machinery and equipment and others is 2 to 20 years.
Useful life, residual value and the depreciation method
are reviewed at least at each fiscal year-end. If there have
been any changes, they are prospectively reflected as
changes in accounting estimates.
(8) Goodwill and intangible assets
(a) Goodwill
Goodwill is not amortized but is tested for impairment at
least annually. Goodwill is presented at cost less
accumulated impairment losses.
(b) Intangible assets
Intangible assets are measured at cost on initial
recognition and presented at cost less any accumulated
amortization and any accumulated impairment losses.
Development expenditures are recognized as intangible
assets only if they are reliably measurable and technically
and commercially realizable; it is probable that they will
result in future economic benefits; and the Company and
its consolidated subsidiaries intend and have sufficient
ability to complete development and use or sell the assets.
Significant accounting policies
65
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Intangible assets acquired in a business combination are
measured at fair value on initial recognition.
Intangible assets with finite useful lives are mainly
software for internal use and customer relationship which
are amortized on a straight-line basis over the estimated
useful life. The estimated useful life of software is
approximately 3 to 5 years, while that of customer
relationship is approximately 13 to 20 years.
Estimated useful life, residual value and the amortization
method are reviewed at each fiscal year-end. If there have
been any changes, they are prospectively reflected as
changes in accounting estimates.
The Company does not amortize intangible assets with
indefinite useful lives but tests them for impairment at least
annually.
(9) Leases
A lease which contractually transfers substantially all the
risks and rewards of ownership of an asset to the
Company and its consolidated subsidiaries is classified as
a finance lease. Other lease transactions are classified as
operating leases.
A leased asset in a finance lease transaction is recorded
at the commencement of the lease at the lower of the
present value of the minimum lease payments or the fair
value of the asset. The depreciation of the leased assets is
calculated in accordance with the Company’s depreciation
policy for owned property, plant and equipment.
Minimum lease payments in finance lease transactions
are apportioned between the finance charge and the
reduction of the outstanding liability. The finance charge is
allocated to each period during the lease term so as to
produce a constant periodic rate of interest on the
remaining balance of the liability.
In an operating lease transaction, lease payments are
recognized as an expense over the lease term on a
straight-line basis.
(10) Impairment of non-financial assets
The Group determines whether there is an indication of
impairment for non-financial assets, excluding inventories
and deferred tax assets. If there is an indication of
impairment, these non-financial assets are tested for
impairment. Goodwill and intangible assets with an
indefinite useful life are tested for impairment at least
annually at the same time every year.
The recoverable amount of an asset or cash generating
unit is the higher of its value in use and its fair value less
costs of disposal. Estimated future cash flows used in the
calculation of value in use are discounted to their present
value using a pre-tax discount rate reflecting the time value
of money and the risks specific to the asset. If it is not
possible to estimate the recoverable amount of the
individual asset, the recoverable amount of the cash-
generating units are determined by integrating the asset
into the smallest group of assets that includes the asset
and generates cash inflows that are largely independent of
the cash inflows from other assets or groups of assets.
Impairment losses are recognized in profit or loss if the
carrying amount of an asset or a cash-generating unit
exceeds its recoverable amount. Impairment losses
recognized on cash-generating units are allocated first to
reduce the carrying amount of goodwill allocated to the unit
and then to reduce pro rata the carrying amounts of the
other assets in the unit.
Impairment losses for goodwill are not reversed. For
assets other than goodwill, it is assessed whether there is
any indication that impairment losses recognized in prior
p e r i o d s m a y h a v e d e c r e a s e d o r n o l o n g e r e x i s t .
Impairment losses are reversed if the recoverable amount
exceeds the carrying amount. When reversing impairment
losses, the maximum to which the carrying amount of an
asset is increased is its carrying amount (less necessary
depreciation and amortization) if the impairment loss had
not been recognized.
(11) Employee benefits
(a) Post-employment benefits
The Company and its consolidated subsidiaries provide
defined contribution plans and defined benefit plans as
employee retirement benefit plans.
The present value of the defined benefit obligations and
the related current service cost and past service cost are
determined using the projected unit credit method.
The period of discount is determined based on the
period to the date on which future annual benefits are
expected to be paid. Discount rates are determined by
reference to market yields consistent with the period of
discount on high quality corporate bonds, at the end of the
consolidated fiscal year.
Net defined benefit liability or asset is determined at the
present value of the defined benefit obligation less the fair
value of the plan assets. If the determination shows that a
defined benefit plan has been overfunded for the Company
and its consolidated subsidiaries, the defined benefit asset
is recognized at the present value of any economic
benefits available in the form of refunds from the plan or
reductions in future contributions to the plan as a ceiling.
The amount of change in fair value arising from
remeasurement of the present value of defined benefit
obligations and the fair value of plan assets is fully
recognized in other comprehensive income in the periods
in which it arises and immediately reclassified to retained
earnings.
Past service costs arising on plan amendments are
recognized in profit or loss for the period in which they
arise.
C o n t r i b u t i o n s t o d e f i n e d c o n t r i b u t i o n p l a n s a r e
recognized as expenses for the period in which the
employees render the related service.
(b) Short-term employee benefits
Short-term employee benefits are not discounted. They
are recognized as expenses at the time that the employees
render the related service.
For bonuses, the amount expected to be paid is
recognized as a liability if there is a legal or constructive
obligation for payments and it can be reliably estimated.
(12) Provisions
Provisions are recognized when the Company and its
consolidated subsidiaries have a present legal or
constructive obligation as a result of a past event, and it is
probable that an outflow of economic resources will be
required to settle the obligation and a reliable estimate can
be made of the amount of the obligation. If the effect of the
time value of money is material, provisions are recognized
at the amounts of estimated future cash flows discounted
to their present value using a pre-tax discount rate that
reflects the time value of money and the risks specific to
the liabilities.
66
Significant accounting policies
Notes to Consolidated Financial StatementsMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 (13) Revenues
The Company and its consolidated subsidiaries
r e c o g n i z e r e v e n u e i n a n a m o u n t t h a t r e f l e c t s t h e
consideration to which they expect to be entitled by
transferring a good or service to a customer using the five-
step approach below, except for income from interest and
dividends as defined in IFRS 9.
Step1：Identify the contract(s) with a customer.
Step2：Identify the performance obligations in the contract.
Step3：Determine the transaction price.
Step4：Allocate the transaction price to the separate
performance obligations in the contract.
Step5：Recognize revenue when (or as) the entity
satisfies a performance obligation.
For mass-produced goods such as home appliances,
semiconductors and industrial products, revenue is
recognized when the customer accepts the product. For
products requiring acceptance inspection of delivered
goods, revenue is only recognized when the customer
accepts the product, the Group verifies that the product
achieves predefined performance and there remain only
verification of items that are not significant for the
customer’s final operation check. Consideration for
transactions is received primarily within one year after the
performance obligation has been satisfied.
Revenue from maintenance agreements is recognized
over the contract term as the maintenance is provided.
Revenue from specific construction contracts meeting
certain criteria is recognized according to the progress of
the construction if progress can be reasonably measured.
Revenue is recognized only to the extent of the cost
incurred if progress cannot be reasonably measured. The
progress of construction is measured by comparing the
cost incurred through the current year to the estimated
total cost. Estimates and underlying assumptions for the
aggregate amount of estimated cost are reviewed on an
ongoing basis since there is a possibility that the cost
incurred may change due to the progress of construction.
Consideration from maintenance agreements and
specific construction contracts meeting certain criteria is
received incrementally during the period of the contract,
separately from the satisfaction of performance obligations,
and the remaining amount is received primarily within one
year after all performance obligations are satisfied.
C o n t r a c t a s s e t s a r e r e c o g n i z e d a s r i g h t s t o
consideration recorded due to recognizing revenue
according to progress. Contract assets are reclassified to
trade receivables when the rights to consideration become
unconditional. Advance consideration received from
customers before fulfillment of the contract is recognized
as a contract liability and reversed as revenue from the
contract related to the advance consideration is recognized.
Revenue is recognized in an amount that reflects the
consideration to which the Company and its consolidated
subsidiaries expect to be entitled by transferring the good
or service. For contracts which consist of any combination
of products, equipment, installation and maintenance, each
element is treated as a separate performance obligation
and revenue is allocated to each element in proportion to
its stand-alone selling price when the good or service
provided has a stand-alone value as a separate product.
For contracts which include subsequent changes in
consideration such as rebates and discounts, the
transaction price is determined by taking into account the
variable consideration in a way that the actual value does
not significantly diverge from the estimate.
For contracts in which significant financing benefits are
received because the timing of satisfaction of the
performance obligation and the customer’s payment differ,
the transaction price is determined after adjustment to
reflect the time value of money. The adjustment is
recognized as interest expense or income.
For contracts in which the Company and its consolidated
subsidiaries do not have discretion in establishing the
transaction price, do not have inventory risk, or another
party is primarily responsible for fulfilling the contract,
revenue is recognized on a net basis.
Any anticipated losses on fixed-price contracts are
recognized in the Consolidated Statement of Profit or Loss
when such losses can be reliably estimated. Provisions are
made for contingencies in the period when they become
known pursuant to specific contract terms and conditions
and are reliably estimable.
(14) Income taxes
Income taxes consist of current and deferred taxes.
Income taxes are recognized in profit or loss except for
those related to business combinations and those related
t o i t e m s r e c o g n i z e d d i r e c t l y i n e q u i t y o r o t h e r
comprehensive income.
Current tax is measured at the amount expected to be
paid to (recovered from) the taxation authorities. The
amount of tax is calculated based on tax rates and tax laws
that have been enacted or substantively enacted by the
end of the reporting period.
Deferred taxes are recognized for temporary differences
between the accounting carrying amounts of assets and
liabilities and their tax basis, tax loss carryforwards and tax
credit carryforwards at the end of the reporting period.
Deferred tax assets and liabilities are not recognized for
the following temporary differences:
- Taxable temporary differences arising from the initial
recognition of goodwill
- Temporary differences arising from the initial recognition
of an asset or liability in a transaction which is not a
business combination and, at the time of the transaction,
affects neither accounting profit nor taxable profit
- T a x a b l e t e m p o r a r y d i f f e r e n c e s a s s o c i a t e d w i t h
investments in consolidated subsidiaries, associates and
joint ventures, when the timing of reversal can be
controlled and it is probable that the temporary difference
will not reverse in the foreseeable future
Deferred tax assets and liabilities are measured at the
tax rates and in accordance with tax laws that are
expected to apply to the period when the asset is realized
or the liability is settled, based on tax rates and tax laws
that have been enacted or substantively enacted by the
end of the reporting period.
Deferred tax assets and liabilities are offset if the
Company and its consolidated subsidiaries have a legally
enforceable right to offset current tax assets against
current tax liabilities and the deferred tax assets and the
deferred tax liabilities relate to income taxes levied by the
same taxation authority on either the same taxable entity
or different taxable entities which intend to settle on a net
basis.
A deferred tax asset is recognized for deductible
temporary differences, unused tax losses and tax credit
carryforwards to the extent that is probable that they can
be utilized against future taxable profit. Deferred tax assets
are reviewed at the end of each reporting period and
reduced to the extent that is no longer probable that the
related tax benefits will be realized.
67
Significant accounting policies
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
In principle, deferred tax liabilities are recognized for all
taxable temporary differences. Deferred tax assets are
recognized for all deductible temporary differences to the
extent that is probable that future taxable profit will be
available against which the deductible temporary
difference can be utilized.
(15) Earnings per share
The Company and its consolidated subsidiaries calculate
basic earnings per share for net profit attributable to
Mitsubishi Electric Corp. stockholders by dividing net profit
attributable to Mitsubishi Electric Corp. stockholders by the
weighted-average number of ordinary shares outstanding
adjusted for treasury stock during each year.
Diluted earnings per share for net profit attributable to
Mitsubishi Electric Corp. stockholders is calculated after
adjusting for the effect of all dilutive potential ordinary
shares.
(16) Government grants
Asset-related government grants are recognized when
there is reasonable assurance that the Company and its
consolidated subsidiaries will comply with the attached
conditions and will receive the grants. Grants are
recognized by calculating the carrying amount of the asset,
in which the amount of government grants measured at fair
value is directly deducted from the cost of the asset.
4．Significant accounting estimates and judgments
Management is required to make judgments, estimates and assumptions that affect the application of accounting policies
and amounts of assets, liabilities, income and expenses in preparation of the consolidated financial statements in
accordance with IFRS. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. The effects resulting from changes in
accounting estimates are recognized in the period when estimates are revised and in the subsequent periods.
Accounting estimates and assumptions which could have a significant effect on amounts in the consolidated financial
statements are as follows:
- Recoverable amount of property, plant and equipment, goodwill and intangible assets (see Note “12: Impairment losses”)
- Recoverability of deferred tax assets (see Note “14: Income taxes”)
- Measurement of defined benefit obligation (see Note “19: Employee benefits”)
- Recognition and measurement of provisions (see Note “20: Provisions”)
- Estimated total cost of contracts in which performance obligations are satisfied over time (see Note “23: Revenues”)
- Fair value of financial instruments (see Note “28: Financial instruments”)
5．New accounting standards not yet adopted
Major standards and interpretations issued as of the date of the approval of the consolidated financial statements that
have not yet been adopted as of March 31, 2019 are as follows.
Standard
Title
Mandatory application date
(fiscal years beginning on or
after)
Fiscal year of
adoption by the Group
Overview of new standards/amendments
IFRS 16
Leases
January 1, 2019
The year ending
March 31, 2020
Revision of definition of leases and
primarily lessee accounting
The Group introduce single accounting model to capitalize lessee’s lease in principle by applying IFRS 16. For all leases
other than leases that have a lease term of 12 months or less and leases for which the underlying asset is of low value,
right-of-use assets that represent a right to use an underlying asset and lease liabilities that represent the obligation for
lease payment are recognized at the commencement date. After recognition of right-of-use assets and lease liabilities,
depreciation of right-of-use assets and interest expense on lease liabilities are recognized. The Group will adopt the
modified retrospective approach that recognize the cumulative effects of the application as an adjustment of the opening
balance of retained earnings at the date of initial application.
The adoption of this standard is expected to newly increase lease assets and lease liabilities by approximately ¥94,000
million (847 million U.S dollars) and ¥96,000 million (865 million U.S dollars), respectively, in the consolidated statement of
financial position at the beginning of the year. The effect on the consolidated statement of profit or loss is not expected to
be material. For the presentation of the consolidated statement of cash flows, the lease payment of operating lease
classified within operating activities previously will be classified within financing activities as payment for lease liabilities
after deductions for interest equivalent.
68
Significant accounting policies、Significant accounting estimates and judgments、New accounting standards not yet adopted
Notes to Consolidated Financial StatementsMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 6．Segment information
(1) Overview of reportable segments
The operating segments presented below are identified based on the segments for which separate financial information is
available, and are periodically used for decisions on business resources allocation and evaluation of business operation by
the Company’s management.
The Group conducts business through 6 categories, Energy and Electric Systems, Industrial Automation Systems,
Information and Communication Systems, Electronic Devices, Home Appliances, and Others, by aggregating multiple
operating segments based on types and characteristics of products, production methods, and similarities in market.
Principal operating segments and major products and services included in each category are as follows:
Energy and Electric
Public Utility Systems
Turbine generators, hydraulic turbine generators, nuclear power plant equipment,
Systems
Energy & Industrial
motors, transformers, power electronics equipment, circuit breakers, gas insulated
Systems
switchgears, switch control devices, surveillance-system control and security
Building Systems
systems, transmission and distribution ICT systems, large display devices,
electrical equipment for locomotives and rolling stock, elevators, escalators,
building security systems, building management systems, and others
Industrial
Automation
Systems
Factory Automation
Programmable logic controllers, inverters, servomotors, human-machine interface,
Systems
Automotive
Equipment
motors, hoists, magnetic switches, no-fuse circuit breakers, short-circuit breakers,
transformers for electricity distribution, time and power meters, uninterruptible
power supply, industrial fans, computerized numerical controllers, electrical
discharge machines, laser processing machines, industrial robots, clutches,
automotive electrical equipment, electric powertrain system, car electronics and car
mechatronics, car multimedia, and others
Information and
Communication
Wireless and wired communications systems, network camera systems, satellite
Communication
Systems
communications equipment, satellites, radar equipment, antennas, missile
Systems
Information Systems
systems, fire control systems, broadcasting equipment, data transmission devices,
& Network Service
network security systems, information systems equipment, systems integration,
Electronic Systems
and others
Electronic Devices
Semiconductor &
Power modules, high-frequency devices, optical devices, LCD devices, and others
Device
Home Appliances
Living Environment
Room air conditioners, package air conditioners, chillers, showcases,
& Digital Media
compressors, refrigeration units, air-to-water heat pump boilers, ventilators,
Equipment
photovoltaic systems, hot water supply systems, IH cooking heaters, LED lamps,
fluorescent lamps, indoor lighting, LCD televisions, refrigerators, electric fans,
dehumidifiers, air purifiers, cleaners, jar rice cookers, microwave ovens, and others
Others
―
Procurement, logistics, real estate, advertising, finance, and other services
Intersegment transactions are conducted generally at prices that the Company’s management recognizes as
approximate arm's length prices. The calculation method of operating profit (loss) for reportable segments is consistent with
that used in the Consolidated Statement of Profit or Loss. It does not include share of profit of investments accounted for
using the equity method, financial income or financial expenses.
Segment information
69
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 (2) Segment information by business categories
Segment information by business categories are as follows. Amounts of operating profit in Eliminations and corporate are
unallocatable research and development expenses.
Energy and
Industrial
Information and
2018
Automation
Communication
Electronic
Home
Yen (millions)
Eliminations
and
Consolidated
Systems
Systems
Devices
Appliances
Others
Total
corporate
total
Electric
Systems
I Revenue and operating
profit
Revenue
(1)External customers
¥ 1,244,941 ¥ 1,431,713 ¥
390,915 ¥
165,378 ¥ 1,033,134 ¥ 178,343 ¥ 4,444,424 ¥
― ¥ 4,444,424
(2)Intersegment
8,121
13,215
47,269
36,916
16,235
480,716
602,472
(602,472)
―
Total
1,253,062
1,444,928
438,184
202,294
1,049,369
659,059
5,046,896
(602,472)
4,444,424
Operating profit
65,457
187,350
11,340
14,164
55,496
24,034
357,841
(30,397)
327,444
II Other items
Depreciation and amortization
28,925
70,727
18,402
Impairment losses
361
131
―
12,546
1,514
40,293
1,935
6,379
261
177,272
4,202
―
―
177,272
4,202
Capital expenditures
¥
30,603 ¥
83,992 ¥
17,984 ¥
15,497 ¥
43,834 ¥
17,282 ¥
209,192 ¥
― ¥
209,192
Energy and
Industrial
Information and
2019
Automation
Communication
Electronic
Home
Yen (millions)
Eliminations
and
Consolidated
Systems
Systems
Devices
Appliances
Others
Total
corporate
total
Electric
Systems
I Revenue and operating
profit
Revenue
(1)External customers
¥ 1,287,724 ¥ 1,453,958 ¥
384,851 ¥
157,987 ¥ 1,056,943 ¥ 178,458 ¥ 4,519,921 ¥
― ¥ 4,519,921
(2)Intersegment
9,021
13,675
41,418
41,921
17,101
498,278
621,414
(621,414)
―
Total
1,296,745
1,467,633
426,269
199,908
1,074,044
676,736
5,141,335
(621,414)
4,519,921
Operating profit
82,501
142,563
12,247
1,442
59,451
24,172
322,376
(31,899)
290,477
II Other items
Depreciation and amortization
26,032
72,355
19,740
14,368
Impairment losses
190
―
―
930
37,556
1,212
6,196
313
176,247
2,645
―
―
176,247
2,645
Capital expenditures
¥
28,808 ¥
92,056 ¥
20,271 ¥
19,384 ¥
42,406 ¥
15,102 ¥
218,027
― ¥
218,027
Energy and
Industrial
Information and
2019
Automation
Communication
Electronic
Home
U.S. dollars (thousands)
Eliminations
and
Consolidated
Systems
Systems
Devices
Appliances
Others
Total
corporate
total
Electric
Systems
I Revenue and operating
profit
Revenue
(1)External customers
$ 11,601,117 $ 13,098,721 $
3,467,126 $ 1,423,306 $
9,522,009 $ 1,607,730 $ 40,720,009 $
― $ 40,720,009
(2)Intersegment
81,270
123,198
373,135
377,667
154,063
4,488,991
5,598,324
(5,598,324)
―
Total
11,682,387
13,221,919
3,840,261
1,800,973
9,676,072
6,096,721
46,318,333
(5,598,324)
40,720,009
Operating profit
II Other items
743,252
1,284,351
110,333
12,991
535,595
217,766
2,904,288
(287,378)
2,616,910
Depreciation and amortization
234,523
651,847
177,838
129,441
338,342
55,820
1,587,811
Impairment losses
1,712
―
―
8,378
10,919
2,820
23,829
―
―
1,587,811
23,829
Capital expenditures
$
259,532 $
829,332 $
182,622 $
174,631 $
382,036 $
136,054 $
1,964,207 $
― $
1,964,207
70
Segment information
Notes to Consolidated Financial StatementsMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 (3) Information by geographical areas
Revenue from external customers by the location of customers are as follows:
2018
2019
2019
Revenue from
external
customers
% of total
revenue
Revenue from
external
customers
% of total
revenue
Revenue from
external
customers
% of total
revenue
Yen (millions)
U.S. dollars (thousands)
Japan
¥
2,438,942
54.9%
¥
2,556,644
56.6% $
23,032,829
North America
419,121
Asia (excluding Japan)
1,089,176
Europe
Others
Overseas Total
Consolidated total
431,316
65,869
2,005,482
4,444,424
9.4%
24.5%
9.7%
1.5%
45.1%
100.0%
429,451
1,013,883
453,748
66,195
1,963,277
4,519,921
9.5%
22.4%
10.0%
1.5%
43.4%
3,868,928
9,134,081
4,087,820
596,351
17,687,180
100.0%
40,720,009
China (within Asia)
¥
545,072
12.3%
¥
486,405
10.8% $
4,382,027
56.6%
9.5%
22.4%
10.0%
1.5%
43.4%
100.0%
10.8%
There are no individual countries or regions with significant revenue from external customers in the years ended March
31, 2018 and 2019, except for Japan and China.
Non-current assets (property, plant and equipment, goodwill and intangible assets) by location of the Company and its
consolidated subsidiaries are as follows:
Japan
North America
Asia
(excluding Japan)
Non-current assets ¥ 543,714
33,617
142,094
Japan
North America
Asia
(excluding Japan)
Non-current assets ¥ 571,492
29,650
144,719
Japan
North America
Asia
(excluding Japan)
Non-current assets ¥ 614,966
29,992
143,566
Japan
North America
Asia
(excluding Japan)
Non-current assets $ 5,540,234
270,198
1,293,388
Date of transition to IFRS (April 1, 2017)
Overseas
Europe
57,011
Overseas
Europe
59,939
Overseas
Europe
60,036
Overseas
Europe
540,865
2018
2019
2019
Others
2,601
Total
235,323
Others
2,124
Total
236,432
Others
1,914
Total
235,508
Others
17,243
Total
2,121,694
Note :The major countries and regions included in each segment are as follows:
(1) North America: United States, Canada, and Mexico
(2) Asia (excluding Japan): China, South Korea, Thailand, Malaysia, Singapore, Indonesia, and India
(3) Europe: United Kingdom, France, Germany, the Netherlands, Spain, Italy, and Czech Republic
Yen (millions)
Corporate
Consolidated
total
45,023
¥
824,060
Yen (millions)
Corporate
Consolidated
total
49,293
¥
857,217
Yen (millions)
Corporate
Consolidated
total
47,681
¥
898,155
U.S. dollars (thousands)
Corporate
Consolidated
total
429,559
$ 8,091,487
Segment information
71
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 7．Trade receivables
Components of trade receivables are as follows. Trade receivables are classified as financial assets measured at
amortized cost.
Notes receivable
Accounts receivable
Total
8．Other financial assets
Yen (millions)
U.S. dollars
(thousands)
Date of transition
to IFRS
(April 1, 2017)
93,612
¥
806,066
¥
899,678
2018
2019
2019
¥
¥
99,267
823,400
922,667
¥
¥
99,778
838,486
938,264
$
898,901
7,553,928
$ 8,452,829
(1) Components of other financial assets
Components of other financial assets are set out in the table below. Equity instruments are classified as financial assets
measured at fair value through other comprehensive income. Derivative assets and debt instrumens are classified as
financial assets measured at fair value through profit or loss. Accounts receivable (non-trade), loans and others are
classified as financial assets measured at amortized cost.
Other financial assets
Equity instruments
Accounts receivables (non-trade)
Loans
Derivative assets
Debt instruments
Others
Total
Current assets
Non-current assets
Total
Yen (millions)
U.S. dollars
(thousands)
2018
2019
2019
Date of transition
to IFRS
(April 1, 2017)
¥
348,925
¥
321,129
¥
262,572
$ 2,365,514
33,760
5,227
1,602
198
40,668
430,380
39,801
390,579
37,574
6,109
4,751
197
40,992
410,752
47,581
363,171
43,817
4,079
1,134
―
41,000
352,602
48,768
303,834
394,748
36,748
10,216
―
369,368
3,176,594
439,351
2,737,243
¥
430,380
¥
410,752
¥
352,602
$ 3,176,594
72
Trade receivables、Other financial assets
Notes to Consolidated Financial StatementsMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 (2) Financial assets measured at fair value through other comprehensive income
Equity instruments which are held primarily to maintain and strengthen business relationships are designated as financial
assets measured at fair value through other comprehensive income.
Major equity instruments held and their fair value are as follows:
Investees
Renesas Electronics Corporation
Suzuki Motor Corporation
Central Japan Railway Company
East Japan Railway Company
Mitsubishi Heavy Industries, Ltd.
Others
Total
Others comprise many small equity instruments.
Yen (millions)
U.S. dollars
(thousands)
2018
2019
2019
Date of transition
to IFRS
(April 1, 2017)
¥
121,955
¥
81,006
¥
20,000
14,160
9,288
6,385
24,794
15,713
9,449
5,829
38,762
21,194
20,069
10,233
6,584
$
349,207
190,937
180,802
92,189
59,315
177,137
184,338
165,730
1,493,064
¥
348,925
¥
321,129
¥
262,572
$ 2,365,514
Note: Dividend income related to financial assets measured at fair value through other comprehensive income is disclosed in note “25. Financial income and
financial expenses”.
(3) Derecognition of financial assets measured at fair value through other comprehensive income
The Company and its consolidated subsidiaries derecognize some financial assets measured at fair value through other
comprehensive income by selling them in order to improve the efficiency of assets or revise business relationships.
The fair value and cumulative gain (loss) before tax effect at the time of sale are as follows:
Yen (millions)
U.S. dollars (thousands)
2018
2019
2019
Fair value
Cumulative gain
(loss)
Fair value
Cumulative gain
(loss)
Fair value
Cumulative gain
(loss)
¥
29,664
¥
12,833
¥
7,702
¥
(4,065)
$
69,387
$
(36,622)
Cumulative gain (loss) recognized as other comprehensive income were reclassified to retained earnings at the time of
derecognition of financial assets. The amounts after tax effect reclassified in the years ended March 31, 2018 and 2019
were 8,668 million yen (gain) and 3,709 million yen ($33,414 thousand) (loss), respectively.
9．Inventories
Components of inventories are as follows:
Finished goods
Work in process
Raw materials
Total
Yen (millions)
U.S. dollars
(thousands)
Date of transition
to IFRS
(April 1, 2017)
277,870
¥
2018
2019
2019
¥
319,479
¥
376,147
$ 3,388,712
170,391
111,641
194,146
132,637
199,360
153,591
1,796,036
1,383,702
¥
559,902
¥
646,262
¥
729,098
$ 6,568,450
The amount of write-downs of inventories recognized as expenses in the years ended March 31, 2018 and 2019 are
11,644 million yen and 15,845 million yen (142,748 thousand U.S. dollars), respectively. These amounts are included in
“Cost of sales” in the Consolidated Statement of Profit or Loss.
Other financial assets、Inventories
73
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 10．Property, plant and equipment
Change in the carrying amount, cost and accumulated depreciation and impairment losses on property, plant and
equipment are as follows:
(1) Carrying amount
Balance at beginning of year
¥
Acquisition
Reclassification from
construction in progress
Depreciation
Impairment losses
Sales and disposals
Exchange differences on
translating foreign operations
Others
Balance at end of year
Balance at beginning of year
Acquisition
Reclassification from
construction in progress
Depreciation
Impairment losses
Sales and disposals
Exchange differences on
translating foreign operations
Others
Balance at end of year
Balance at beginning of year
Acquisition
Reclassification from
construction in progress
Depreciation
Impairment losses
Sales and disposals
Exchange differences on
translating foreign operations
Others
Balance at end of year
¥
¥
¥
$
Land
99,573
113
Buildings and
structures
320,810
1,806
¥
2018
Machinery and
equipment, and
others
222,937
16,568
¥
Construction in
progress
56,158
166,909
¥
¥
126,311
(176,850)
100
―
(145)
(599)
224
50,439
(22,624)
(1,262)
(1,427)
(130,537)
(1,259)
(2,179)
965
1,447
―
(1,154)
(676)
456
(251)
99,015
¥
997
349,704
¥
(1,063)
232,225
¥
(1,530)
43,313
¥
Land
99,015
1,944
Buildings and
structures
349,704
2,749
¥
2019
Machinery and
equipment, and
others
232,225
21,050
¥
Construction in
progress
43,313
172,699
¥
¥
119,417
(153,197)
(129,273)
(1,240)
(2,940)
(713)
―
―
(16)
(161)
33,536
(23,042)
(926)
(1,760)
(686)
231
359,806
¥
(104)
238,422
¥
(1,190)
61,448
¥
Yen (millions)
Total
699,478
185,396
―
(153,161)
(3,820)
(4,881)
3,092
(1,847)
724,257
Yen (millions)
Total
724,257
198,442
―
(152,315)
(2,465)
(5,070)
(1,781)
(528)
760,540
U.S. dollars (thousands)
2019
Machinery and
equipment, and
others
2,092,118
189,639
$
Buildings and
structures
3,150,486
24,766
Construction in
progress
390,207
1,555,847
$
$
Total
6,524,838
1,787,766
302,126
1,075,829
(1,380,153)
―
(207,586)
(8,342)
(15,856)
(1,164,621)
(11,171)
(26,487)
―
―
(144)
(1,372,207)
(22,207)
(45,676)
(6,180)
(6,424)
(1,450)
(16,045)
244
―
(299)
(354)
(221)
535
100,864
Land
892,027
17,514
2,198
―
(2,694)
(3,189)
(1,991)
¥
$
4,820
908,685
2,081
3,241,495
$
(937)
2,147,946
$
$
(10,721)
553,586
$
(4,757)
6,851,712
$
Note: Depreciation on property, plant and equipment is included in “Cost of sales” and “Selling, general and administrative expenses” in the Consolidated
Statement of Profit or Loss.
74
Property, plant and equipment
Notes to Consolidated Financial StatementsMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 (2) Cost
Balance at April 1, 2017
Balance at March 31, 2018
Balance at March 31, 2019
Balance at March 31, 2019
Land
101,513
101,220
103,286
Buildings and
structures
802,053
847,428
871,713
Land
930,505
Buildings and
structures
7,853,270
¥
¥
¥
$
(3) Accumulated depreciation and impairment losses
Balance at April 1, 2017
Balance at March 31, 2018
Balance at March 31, 2019
Balance at March 31, 2019
Land
1,940
2,205
2,422
Buildings and
structures
481,243
497,724
511,907
Land
21,820
Buildings and
structures
4,611,775
¥
¥
¥
$
Machinery and
equipment, and
others
1,888,224
1,961,467
2,013,412
Machinery and
equipment, and
others
18,138,847
Machinery and
equipment, and
others
1,665,287
1,729,242
1,774,990
Machinery and
equipment, and
others
15,990,901
Yen (millions)
Construction in
progress
56,160
43,810
61,930
Total
¥ 2,847,950
¥ 2,953,925
¥ 3,050,341
U.S. dollars (thousands)
Construction in
progress
557,928
Total
$ 27,480,550
Yen (millions)
Construction in
progress
2
497
482
Total
¥ 2,148,472
¥ 2,229,668
¥ 2,289,801
U.S. dollars (thousands)
Construction in
progress
4,342
Total
$ 20,628,838
Leased assets under finance leases are primarily included in machinery and equipment, and others above. The carrying
amount as of the date of transition to IFRS (April 1,2017), March 31, 2018 and 2019 was 14,467 million yen, 14,046 million
yen and 15,714 million yen ($141,568 thousand), respectively.
Property, plant and equipment
75
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 11．Goodwill and intangible assets
Change in the carrying amount, cost and accumulated amortization and impairment losses on goodwill and intangible
assets are as follows:
(1) Carrying amount
Balance at beginning of year
¥
Acquisition
Acquisitions through business
combinations
Amortization
Impairment losses
Sales and disposals
Exchange differences on
translating foreign operations
Others
Balance at end of year
Balance at beginning of year
Acquisition
Acquisitions through business
combinations
Amortization
Sales and disposals
Exchange differences on
translating foreign operations
Others
Balance at end of year
Balance at beginning of year
Acquisition
Acquisitions through business
combinations
Amortization
Sales and disposals
Exchange differences on
translating foreign operations
Others
Balance at end of year
¥
¥
¥
$
¥
¥
¥
¥
$
Goodwill
45,023
―
1,102
―
―
―
3,609
(441)
49,293
Goodwill
49,293
―
1,111
―
―
(2,834)
111
47,681
Goodwill
444,081
―
10,009
―
―
¥
¥
¥
¥
$
Software
37,805
18,041
―
(18,804)
(40)
(150)
14
2,657
39,523
Software
39,523
20,235
172
(19,013)
(255)
(118)
1,440
41,984
Software
356,063
182,297
1,550
(171,288)
(2,297)
(25,532)
(1,063)
¥
¥
¥
¥
$
2018
Customer
relationship
20,659
―
841
(2,274)
―
―
1,680
―
20,906
2019
Customer
relationship
20,906
―
―
(1,898)
―
(786)
(98)
18,124
2019
Customer
relationship
188,342
―
―
(17,099)
―
(7,081)
Yen (millions)
Total
124,582
22,400
2,036
(24,111)
(75)
(173)
6,535
1,766
132,960
Yen (millions)
Total
132,960
29,985
1,834
(23,932)
(345)
(4,312)
¥
¥
¥
Others
21,095
4,359
93
(3,033)
(35)
(23)
1,232
(450)
23,238
Others
23,238
9,750
551
(3,021)
(90)
(574)
(28)
29,826
¥
1,425
137,615
U.S.dollars (thousands)
Others
209,351
87,838
4,964
(27,216)
(811)
Total
$ 1,197,837
270,135
16,523
(215,603)
(3,108)
(5,171)
(38,847)
1,000
429,558
$
12,973
378,235
$
(883)
163,279
$
(252)
268,703
12,838
$ 1,239,775
$
Notes: 1 Amortization of intangible assets are included in “Cost of sales” and “Selling, general and administrative expenses” in the Consolidated Statement of
Profit or Loss.
2 Significant intangible assets excluding goodwill as of the date of transition to IFRS (April 1, 2017), March 31, 2018 and 2019 are customer relationship
in the Home Appliances segment acquired in the December 2015 purchase of DeLclima S.p.A. (currently Mitsubishi Electric Hydronics & IT Cooling
Systems S.p.A. and others). The carrying amount and remaining amortization periods as of the date of transition to IFRS (April 1, 2017), March 31,
2018 and 2019 are 19,582 million yen (average remaining amortization period of 12 years), 19,112 million yen (average remaining amortization period
of 11 years) and 16,544 million yen (149,045 thousand U.S. dollars) (average remaining amortization period of 10 years), respectively.
76
Goodwill and intangible assets
Notes to Consolidated Financial StatementsMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
(2) Cost
Balance at April 1, 2017
Balance at March 31, 2018
Balance at March 31, 2019
Balance at March 31, 2019
Goodwill
45,023
49,293
47,681
Software
108,287
119,382
127,216
Goodwill
429,558
Software
1,146,091
¥
¥
¥
$
(3) Accumulated amortization and impairment losses
Balance at April 1, 2017
Balance at March 31, 2018
Balance at March 31, 2019
Balance at March 31, 2019
Goodwill
―
―
―
Software
70,482
79,859
85,232
Goodwill
―
Software
767,856
¥
¥
¥
$
Customer
relationship
27,028
29,279
27,985
Customer
relationship
252,117
Customer
relationship
6,369
8,373
9,861
Customer
relationship
88,838
Yen (millions)
Others
37,868
43,402
51,775
¥
¥
¥
Total
218,206
241,356
254,657
U.S.dollars (thousands)
Others
466,442
Total
$ 2,294,208
Yen (millions)
Others
16,773
20,164
21,949
¥
¥
¥
Total
93,624
108,396
117,042
U.S.dollars (thousands)
Others
197,739
Total
$ 1,054,433
The amount of research and development expenses for the years ended March 31, 2018 and 2019 are 210,308 million
yen and 212,794 million yen (1,917,063 thousand U.S. dollars), respectively.
12．Impairment losses
(1) Property, plant and equipment and intangible assets (excluding goodwill)
Impairment losses are recognized in “Other profit (loss))” in the Consolidated Statement of Profit or Loss.
For the year ended March 31, 2018, impairment losses consisted of 3,820 million yen of impairment of property, plant
and equipment and 382 million yen of impairment of intangible assets and others. The recoverable amount of an asset or
cash-generating unit is mainly measured based on the fair value less cost of disposal.
For the year ended March 31, 2019, impairment losses consisted of 2,645 million yen ($23,829 thousand) of impairment
mainly of property, plant and equipments. The recoverable amount of an asset or cash generating unit is mainly measured
based on the fair value less cost of disposal.
(2) Goodwill
The cash-generating unit group to which significant goodwill is allocated as of the date of transition to IFRS (April 1,
2017), March 31, 2018,and 2019 was the Home Appliances segment. The carrying amount of goodwill allocated to the
Home Appliances segment are 40,973 million yen, 44,167 million yen and 41,285 million yen (371,937 thousand U.S.
dollars), respectively.
The recoverable amount in impairment tests is calculated using value in use.
Value in use is primarily calculated by discounting to the present value the estimated cash flows based on a five-year
business plan and growth rates approved by management. The discount rate is calculated based on the pre-tax weighted
average cost of capital. The discount rate as of the date of transition to IFRS (April 1, 2017), March 31, 2018 and 2019 are
8.9%, 9.7% and 10.2%, respectively. Growth rates are calculated by reference to long-term expected growth rates of the
market to which the cash-generating unit belongs. The growth rate as of the date of transition to IFRS (April 1, 2017), March
31, 2018 and 2019 are all 0.8%.
Impairment losses on goodwill are not recognized in the years ended March 31, 2018 and 2019．
It is considered unlikely that a significant impairment would have occurred even if the key assumptions used in
determinations of impairment were changed within a reasonably predictable range.
Goodwill and intangible assets、Impairment losses
77
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 13．Investments accounted for using the equity method
The carrying amount of investment and share of comprehensive income in individually immaterial associates and joint
ventures are as follows:
(1) Carrying amount of investment
Associates
Joint ventures
Total
(2) Share of comprehensive income
Associates
Net profit
Other comprehensive income (loss)
Total comprehensive income
Joint ventures
Net Profit
Other comprehensive income (loss)
Total comprehensive income
Total
14．Income taxes
Yen (millions)
U.S. dollars
(thousands)
Date of transition
to IFRS
(April 1, 2017)
114,291
¥
73,067
187,358
¥
2018
2019
2019
¥
¥
121,309
72,999
194,308
¥
¥
119,464
78,495
197,959
$ 1,076,252
707,162
$ 1,783,414
2018
Yen (millions)
2019
¥
¥
20,895
2,080
22,975
3,052
(41)
3,011
25,986
¥
¥
15,101
(3,100)
12,001
5,015
(540)
4,475
16,476
U.S. dollars
(thousands)
2019
136,045
(27,928)
108,117
45,180
(4,865)
40,315
148,432
$
$
Major components of deferred tax assets and liabilities are as follows:
Yen (millions)
U.S. dollars
(thousands)
Yen (millions)
U.S. dollars
(thousands)
Consolidated Statement of Financial Position
Consolidated Statement of Profit or Loss
Date of transition
to IFRS
(April 1, 2017)
2018
2019
2019
2018
2019
2019
¥
82,140
¥ 69,454
¥ 61,395
$ 553,108
¥
(4,177) ¥
(2,889)
$ (26,027)
Deferred tax assets
Net defined
benefit liabilities
Accrued expenses
93,387
90,929
84,843
764,351
(2,458)
(6,126)
(55,189)
Property, plant and
equipment
Inventories
Tax loss
carryforwards
Others
Total
40,739
39,105
38,488
346,739
(1,637)
(624)
(5,622)
40,809
40,877
34,514
310,937
68
(6,372)
(57,405)
1,117
847
737
6,640
(270)
(303)
(2,730)
67,347
325,539
55,062
296,274
55,077
275,054
496,189
2,477,964
(11,972)
(20,446)
(1,116)
(17,430)
(10,055)
(157,028)
3,387
3,860
3,790
34,144
473
(70)
(631)
40,180
38,587
25,720
231,712
―
―
―
Deferred tax liabilities
Property,plant and
equipment
Financial assets
measured at fair
value through other
comprehensive
income
Others
21,349
64,916
Net deferred tax assets ¥ 260,623
Total
20,266
62,713
¥ 233,561
22,621
52,131
¥ 222,923
203,793
469,649
$2,008,315
(1,145)
(672)
2,809
2,739
¥ (19,774) ¥ (20,169)
25,306
24,675
$(181,703)
78
Investments accounted for using the equity method、Income taxes
Notes to Consolidated Financial StatementsMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Changes in net deferred tax assets are as follows:
Balance at beginning of year
Amounts recognized in profit or loss
Amounts recognized in Other comprehensive income
Others
Balance at end of year
2018
Yen (millions)
2019
¥
260,623
¥
233,561
$
(19,774)
(7,361)
73
(20,169)
8,471
1,060
U.S. dollars
(thousands)
2019
2,104,153
(181,703)
76,315
9,550
¥
233,561
¥
222,923
$
2,008,315
In assessing the realizability of deferred tax assets, the Company and its consolidated subsidiaries consider whether it is
probable that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable profit during the periods in which those temporary differences become
deductible. The Company and its consolidated subsidiaries consider the scheduled reversal of deferred tax liabilities,
projected future taxable profit, and tax planning strategies in making this assessment. Based on these factors, the
Company and its consolidated subsidiaries consider the probability that deferred tax assets determined to be recognizable
at March 31, 2019 will be realized to be high, but if future estimated taxable profit decreases during the deferral period,
deferred tax assets considered likely to be realized will be reduced.
Tax loss carryforwards, tax credit carryforwards and deductible temporary differences for which deferred tax assets are
not recognized are as follows:
Tax loss carryforwards
Tax credit carryforwards
Deductible temporary differences
Total
Yen (millions)
U.S. dollars
(thousands)
Date of transition
to IFRS
(April 1, 2017)
79,974
¥
2018
2019
2019
¥
58,685
¥
51,464
$
463,640
3,312
10,279
2,448
10,227
1,113
3,690
10,027
33,243
¥
93,565
¥
71,360
¥
56,267
$
506,910
The expiration schedule of tax loss carryforwards for which deferred tax assets are not recognized are as follows:
Within one year
One to five years
Over five years
Total
Yen (millions)
U.S. dollars
(thousands)
2018
2019
2019
Date of transition
to IFRS
(April 1, 2017)
3,244
¥
¥
20,418
56,312
¥
6,836
7,391
44,458
2,826
4,698
43,940
51,464
$
25,460
42,324
395,856
$
463,640
¥
79,974
¥
58,685
¥
The total amount of taxable temporary differences related to investments in consolidated subsidiaries for which deferred
tax liabilities are not recognized as of the date of transition to IFRS (April 1, 2017), March 31, 2018 and 2019 are 449,218
million yen, 497,276 million yen and 529,955 million yen (4,774,369 thousand U.S. dollars),respectively.
The components of income tax expenses are as set out in the table below.
The amount of the benefit arising from a tax loss or temporary difference of a prior period for which deferred tax assets
were not recognized is included in current and deferred tax expenses. The effect of this on current and deferred tax
expenses in the years ended March 31, 2018 and 2019 are insignificant.
Current tax expense
Deferred tax expense
Origination and reversal of temporary differences
Effect of income tax rate change
Total
2018
Yen (millions)
2019
67,033
¥
58,135
19,044
730
86,807
¥
20,169
―
78,304
¥
¥
U.S. dollars
(thousands)
2019
523,738
181,703
―
705,441
$
$
The Company and its domestic consolidated subsidiaries are subject mainly to corporate tax, inhabitant tax and business
tax. Statutory tax rate of the Company is approximately 31.0% and 30.5% for the years ended March 31, 2018 and 2019,
respectively. Foreign consolidated subsidiaries are subject to income taxes at their locations.
79
Income taxes
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 The causes of the difference between the statutory tax rate and the average effective tax rate are as follows:
Statutory tax rate
Changes in unrecognized deferred tax assets
Expenses permanently not deductible for tax purposes
International tax rate difference
Tax credits
Tax effect attributable to investments accounted for using the equity
method
Others
Average effective tax rate
15．Bonds and borrowings
(1) Components of bonds and borrowings
Components of bonds and borrowings are as follows:
2018
2019
31.0%
0.2
0.6
(5.8)
(2.5)
(2.2)
3.3
24.6%
30.5%
(0.2)
0.6
(4.7)
(2.0)
(2.0)
2.6
24.8%
Unsecured borrowings
Weighted average interest rate
Final maturity
Balance at end of year
Sub total
Unsecured bonds
Annual interest rate: 0.27%, due June 5, 2019
Annual interest rate: 0.43%, due June 4, 2021
Sub total
Lease obligations
Sub total
Total
Current liabilities
Non-current liabilities
Yen (millions)
U.S. dollars
(thousands)
2018
2019
2019
Date of transition
to IFRS
(April 1, 2017)
0.72%
2025
311,765
311,765
20,000
20,000
40,000
22,346
22,346
374,111
146,355
227,756
¥
¥
0.59%
2025
250,468
250,468
20,000
20,000
40,000
21,482
21,482
311,950
122,895
189,055
¥
¥
0.53%
2025
235,972
235,972
20,000
20,000
40,000
22,466
22,466
298,438
104,969
193,469
¥
¥
0.53%
2025
$ 2,125,874
2,125,874
180,180
180,180
360,360
202,397
202,397
2,688,631
945,667
$ 1,742,964
As of March 31, 2019, the Company and its subsidiaries had unused commited lines of credit that can provide short-term
funds from subscribing financial institutions amounting to ¥82,790 million ($745,856 thousand).
(2) Changes in liabilities related to financing activities
Changes in liabilities related to financing activities are as follows:
Yen (millions)
Balance at end of
others
1,148
―
20
2
1,170
¥
¥
year
56,507
40,000
193,961
21,482
311,950
The year ended March 31, 2018
Non-cash changes
Changes from
Balance at
financing cash
Increase from new
beginning of year
flows
leases
Foreign currency
translation
adjustments and
Short-term borrowings
Bonds
Long-term borrowings
Lease obligations
Total
¥
¥
82,855
40,000
228,910
22,346
374,111
¥
¥
(27,496)
―
(34,969)
(9,037)
(71,502)
¥
¥
― ¥
―
―
8,171
8,171
¥
Note: Balances to be repaid or redeemed in 1 year or less are included in “Bonds”, “Long-term borrowings” and “Lease obligations”.
80
Income taxes、Bonds and borrowings
Notes to Consolidated Financial StatementsMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 The year ended March 31, 2019
Non-cash changes
Changes from
Balance at
financing cash
Increase from new
beginning of year
flows
leases
Foreign currency
translation
adjustments and
Short-term borrowings
Bonds
Long-term borrowings
Lease obligations
Total
¥
¥
56,507
40,000
193,961
21,482
311,950
¥
¥
(2,077)
―
(13,534)
(9,358)
(24,969)
¥
¥
― ¥
―
―
10,424
10,424
¥
Note: Balances to be repaid or redeemed in 1 year or less are included in “Bonds”, “Long-term borrowings” and “Lease obligations”.
The year ended March 31, 2019
Non-cash changes
U.S. dollars (thousands)
Changes from
Balance at
financing cash
Increase from new
beginning of year
flows
leases
Foreign currency
translation
adjustments and
Short-term borrowings
Bonds
Long-term borrowings
Lease obligations
Total
$
$
509,072
360,360
1,747,396
193,532
2,810,360
$
$
(18,712)
―
(121,928)
(84,306)
(224,946)
$
$
― $
―
―
93,910
93,910
$
Yen (millions)
Balance at end of
others
1,150
―
(35)
(82)
1,033
¥
¥
year
55,580
40,000
180,392
22,466
298,438
Balance at end of
year
$
$
500,721
360,360
1,625,153
202,397
2,688,631
others
10,361
―
(315)
(739)
9,307
Note: Balances to be repaid or redeemed in 1 year or less are included in “Bonds”, “Long-term borrowings” and “Lease obligations”.
16．Other financial liabilities
Components of other financial liabilities are as set out in the table below. Accounts payable (non-trade) and guarantee
deposits received are financial liabilities measured at amortized cost. Derivative liabilities are financial liabilities measured
at fair value through profit or loss.
Other financial liabilities
Accounts payable-others
Guarantee deposits received
Derivative liabilities
Total
Current liabilities
Non-current liabilities
Total
Yen (millions)
U.S. dollars
(thousands)
2018
2019
2019
Date of transition
to IFRS
(April 1, 2017)
¥
¥
156,169
9,441
4,383
169,993
169,993
―
169,993
¥
¥
152,123
10,025
3,198
165,346
165,346
―
165,346
¥
¥
147,521
10,115
1,943
159,579
159,579
―
159,579
$ 1,329,018
91,126
17,505
1,437,649
1,437,649
―
$ 1,437,649
Bonds and borrowings、Other financial liabilities
81
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 17．Leases
The Company and its consolidated subsidiaries engage in finance lease and operating lease transactions in which they
lease assets mainly including buildings, machinery and equipment.
(1) Finance lease obligations
Minimum lease payments and their present value based on finance lease agreements are as follows:
Yen (millions)
Minimum lease payments
U.S. dollars
(thousands)
Yen (millions)
U.S. dollars
(thousands)
Present value of minimum lease payments
Date of transition
to IFRS
(April 1, 2017)
¥
8,836 ¥
16,355
48
25,239
2018
2019
2019
8,731 ¥
15,608
37
24,376
9,302
16,111
49
25,462
$ 83,802
145,145
441
229,388
(2,893)
(2,894)
(2,996)
(26,991)
¥ 22,346 ¥ 21,482 ¥ 22,466
$ 202,397
Within one year
One to five years
Over five years
Total
Deductions for financial
expenses and others
Present value of
lease obligations
Date of transition
to IFRS
(April 1, 2017)
¥
2018
2019
2019
7,697 ¥
7,822 ¥
8,204
14,217
45
¥ 22,346 ¥ 21,482 ¥ 22,466
14,480
44
13,752
33
$ 73,910
128,081
406
$ 202,397
(2) Operating leases
Future minimum lease payments under non-cancelable operating leases are as follows:
Yen (millions)
U.S. dollars
(thousands)
2018
2019
2019
Within one year
One to five years
Over five years
Total
Minimum lease payments related to operating leases recognized as expenses in the years ended March 31, 2018 and
2019 are 53,380 million yen and 57,904 million (521,658 thousand U.S. dollars) yen, respectively. These operating leases
were mainly for office space, warehouses, employee facilities and computer equipment.
208,451
394,279
85,883
688,613
21,376
42,961
6,199
70,536
23,138
43,765
9,533
76,436
$
¥
¥
$
¥
¥
¥
Date of transition
to IFRS
(April 1, 2017)
18,459
¥
44,302
11,115
73,876
18．Trade payables
Components of trade payables are as set out in the table below. Trade payables are classified as financial liabilities
measured at amortized cost.
Yen (millions)
U. S. dollars
(thousands)
Date of transition
to IFRS
(April 1, 2017)
127,585
¥
507,498
635,083
¥
2018
2019
2019
¥
¥
89,661
489,905
579,566
¥
¥
90,840
468,801
559,641
$
818,378
4,223,433
$ 5,041,811
Notes payable
Accounts payable
Total
19．Employee benefits
(1) Post-employment benefits
The Company has non-contributory and contributory defined benefit plans covering its employees who meet eligibility
requirements. Under the non-contributory plans, employees with less than twenty years of service are entitled to lump-sum
payments at date of severance, and employees with twenty or more years of service are entitled to annuity payments
subsequent to retirement, determined by the current basic rate of pay, length of service and termination conditions. In
addition, certain employees who meet the eligibility requirements are entitled to additional lump-sum payments at the date
of retirement based on the retirement age. Under the contributory plans, employees are entitled to lump-sum or annuity
payments at a certain age. The assets of certain of the non-contributory plans and the contributory plans are combined in
accordance with the regulations and administered by a board of trustees comprised equally of employer and employee
representatives. An employee retirement benefit trust is established for certain of the non-contributory plans.
82
Leases、Trade payables、Employee benefits
Notes to Consolidated Financial StatementsMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 The institution managing the fund and plan assets is legally obligated to act with the objective of maximizing the benefit to
plan participants, and bears responsibility for management of the plan assets according to a prescribed investment policy.
The Company is obligated to contribute to the fund over the future, and the amount of the contribution is periodically revised
to the extent as is permitted in laws and regulations.
The Company amended its benefit plan under labor and management agreement during the year ended March 31, 2005,
and established a defined contribution plan in part of non-contributory benefit plan on April 1, 2005. In addition, the
Company amended its contributory defined benefit plan and introduced a cash balance pension plan. Under the cash
balance pension plan, each participant has a notional account which is credited yearly based on the current rate of
contribution and market-related interest rate.
The domestic consolidated subsidiaries provide various pension plans, including employees’ pension fund plans, and/or
corporate pension fund plans, based on each subsidiary’s respective pension policies.
In addition, foreign consolidated subsidiaries that have adopted a pension policy mainly provides defined contribution
pension plans.
(2) Defined benefit plans
Changes in the present value of defined benefit obligations and fair value of plan assets are as follows:
Present value of a defined benefit obligation
Balance at beginning of year
¥
1,179,673
¥
1,177,570
$
10,608,739
2018
2019
2019
Yen (millions)
U.S.dollars (thousands)
Service cost
Interest cost
Remeasurements of defined benefit pension plans
Actuarial gains and losses arising from changes in
demographic assumptions
Actuarial gains and losses arising from changes in
financial assumptions
Others
Benefits paid
Others
Balance at end of year
Fair value of plan assets
Balance at beginning of year
Interest income
Remeasurements of defined benefit pension plans
Return on plan assets (excluding interest income)
Employer contributions
Plan participants' contributions
Benefits paid
Others
Balance at end of year
Net defined benefit liability recognized in the Consolidated
Statement of Financial Position
36,750
7,527
(598)
9,307
4,017
(60,193)
1,087
38,483
6,567
617
6,190
5,185
(58,447)
(1,145)
346,694
59,162
5,559
55,766
46,712
(526,551)
(10,315)
1,177,570
1,175,020
10,585,766
1,015,173
1,055,222
6,904
6,396
43,274
27,358
833
(39,600)
1,280
29,551
27,422
850
(38,003)
(979)
1,055,222
1,080,459
122,348
94,561
9,506,505
57,622
266,225
247,045
7,658
(342,370)
(8,820)
9,733,865
851,901
Net defined benefit liabilities
Net defined benefit assets
Net amount
174,717
52,369
¥
122,348
¥
180,576
86,015
94,561
1,626,811
774,910
851,901
$
Notes: 1 Service costs, interest costs and interest income are included in “Cost of sales” and “Selling, general and administrative expenses” in the
consolidated statement of profit or loss.
2 Part of net defined benefit liabilities is included in “Other current liabilities” in the consolidated statement of financial position.
3 Net defined benefit assets are included in “Other non-current assets” in the consolidated statement of financial position.
The company and its consolidated subsidiaries plan to pay contributions of 27,323 million yen (246,153 thousand U.S.
dollars) in the next fiscal year.
Employee benefits
83
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 The Company’s investment policies are designed to ensure adequate plan assets are available to provide future
payments of pension benefits to eligible participants. Taking into account the expected long-term rate of return on plan
assets, the Company formulates an investment portfolio comprised of the optimal combination of equity and debt
instruments. Plan assets are invested in individual equity and debt instruments using the guidelines of the investment
portfolio in order to produce a total return that will match the expected return on a mid-term to long-term basis. The
Company evaluates the gap between expected return and actual return of invested plan assets on an annual basis. In
addition, taking into consideration the management environment and the revision of regulations, the Company revises the
investment portfolio when and to the extent considered necessary to achieve the expected long-term rate of return on plan
assets based on the pension asset and liability management method.
The Company’s target asset allocation ratios are as follows: approximately 18% is invested in equity instruments,
approximately 65% is invested in debt instruments and investments in life insurance company general accounts and
approximately 17% is invested in other investments, primarily in hedge funds. As for selection of plan assets, the Company
examines the nature of investments, and appropriately diversifies investments.
Major components of plan assets are as follows:
Date of transition to IFRS
(April 1, 2017)
2018
2019
2019
Has quoted
market prices
in active markets
Total
Has quoted
market prices
in active markets
Total
Has quoted
market prices
in active markets
Total
Yes
No
Yes
No
Yes
No
Has quoted
market prices
in active markets
Yes
No
Total
Yen (millions)
U.S.dollars (thousands)
¥
22,090
―
22,090
¥
21,178
―
21,178
¥
21,320
―
21,320
$
192,072
―
192,072
211,657
―
211,657
230,408
―
230,408
248,472
―
248,472
2,238,486
―
2,238,486
Cash and cash
equivalents
Equity instruments
Marketable equity
securities
Pooled funds
―
179,368
179,368
―
154,156
154,156
―
158,605
158,605
―
1,428,874
1,428,874
Debt instruments
Government,
municipal and
corporate bonds
Pooled funds
Life insurance
company general
accounts
Others
5,414
14,804
20,218
6,036
14,161
20,197
3,485
14,272
17,757
31,397
128,577
159,974
―
―
―
373,851
373,851
101,100
101,100
106,889
106,889
―
―
―
387,779
387,779
102,436
102,436
139,068
139,068
―
―
―
375,343
375,343
104,184
104,184
154,778
154,778
―
―
―
3,381,468
3,381,468
938,595
938,595
1,394,396
1,394,396
Total
¥
239,161
776,012
1,015,173
¥
257,622
797,600
1,055,222
¥
273,277
807,182
1,080,459
$
2,461,955
7,271,910
9,733,865
Notes: 1 Marketable equity securities include mainly domestic stocks.
2 Equity instrument pooled funds are invested into approximately 30% domestic equities and approximately 70% foreign equities as of the date of
transition to IFRS (April 1, 2017), approximately 40% domestic equities and 60% foreign equities as of March 31, 2018 and approximately 40%
domestic equities and 60% foreign equities as of March 31, 2019.
3 Debt instrument pooled funds are invested into approximately 60% domestic bonds and approximately 40% foreign bonds as of the date of transition
to IFRS (April 1, 2017), approximately 50% domestic bonds and 50% foreign bonds as of March 31, 2018 and approximately 60% domestic bonds
and 40% foreign bonds as of March 31, 2019.
4 Others include hedge funds.
84
Employee benefits
Notes to Consolidated Financial StatementsMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 The key actuarial assumptions used to determine the present value of the defined benefit obligation are as follows:
Date of transition to IFRS
(April 1, 2017)
2018
2019
Discount rate
0.7%
0.6%
0.5%
The effect of 0.5% change in the discount rate used in actuarial calculations on the present value of the defined benefit
obligation is as follows. The sensitivity analysis assumes no change in other assumptions, but in actuality, changes in other
assumptions may affect the sensitivity analysis.
Discount rate increases 0.5%
Discount rate decreases 0.5%
¥
¥
Yen (millions)
U.S.dollars (thousands)
2018
Decrease of
2019
¥ Decrease of 63,212
64,649
2019
$ Decrease of
569,477
Increase of
68,986
¥
Increase of 69,061
$
Increase of
622,171
The weighted average duration of the defined benefit obligation for the years ended March 31, 2018 and 2019 are both
11.6 years.
(3) Defined contribution plans
The amount of cost recognized for the Company and certain consolidated subsidiaries’ defined contribution plans for the
years ended March 31, 2018 and 2019 are 10,881 million yen and 11,570 million yen (104,234 thousand U.S. dollars),
respectively.
(4) Employee benefits expense
The total amount of employee benefits expense included in the Consolidated Statement of Profit or Loss for the years
ended March 31, 2018 and 2019 are 1,128,632 million yen and 1,168,476 million yen (10,526,811 thousand U.S. dollars),
respectively.
20．Provisions
Components and changes in provisions in the year ended March 31, 2019 are as follows:
Balance at beginning of year
Additions
Utilized
Reversed
Exchange differences on translating
foreign operations and others
Balance at end of year
Current liabilities
Non-current liabilities
¥
¥
Provision for product
Provision for loss on
2019
warranties
60,853
17,630
(17,343)
(3,037)
(21)
¥
construction contracts
48,646
36,349
(42,826)
(342)
¥
Other provisions
13,714
7,185
(3,820)
(4,075)
84
(86)
58,082
¥
41,911
¥
12,918
Yen (millions)
Total
123,213
61,164
(63,989)
(7,454)
(23)
112,911
106,006
6,905
¥
¥
¥
Employee benefits、Provisions
85
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Balance at beginning of year
Additions
Utilized
Reversed
Exchange differences on translating
foreign operations and others
Balance at end of year
Current liabilities
Non-current liabilities
$
$
Provision for product
Provision for loss on
2019
warranties
548,225
158,829
(156,243)
(27,360)
(189)
$
construction contracts
438,252
327,468
(385,820)
(3,081)
$
Other provisions
123,549
64,730
(34,414)
(36,712)
757
(775)
523,262
$
377,576
$
116,378
U.S. dollars (thousands)
$
$
$
Total
1,110,026
551,027
(576,477)
(67,153)
(207)
1,017,216
955,009
62,207
(1) Provision for product warranties
The Company and its consolidated subsidiaries generally offer warranties on their products against certain manufacturing
and other defects for specific periods of time and/or used conditions of the product depending on the nature of the product,
the geographic location of its sale and other factors. The Company and its consolidated subsidiaries recognize accrued
warranty costs based primarily on historical experience of actual warranty claims as well as current information on repair
costs.
(2) Provision for loss on construction contracts
The Company and its consolidated subsidiaries record the expected amount of future losses on an individual construction
order as a provision for loss on construction, if it is likely that the estimated total cost of such construction will exceed the
contract order amount and if the expected loss amount can be reasonably estimated. The timing of expenditure is affected
by future construction progress.
21．Equity and other equity items
(1) Common stock
(a) Number of total authorized shares
The number of total authorized shares as of the date of transition to IFRS (April 1, 2017), March 31, 2018 and 2019 was
8,000,000,000 shares.
(b)Number of shares issued
Changes in the number of shares issued are as follows:
Balance at beginning of year
Changes during the year
Balance at end of year
2018
2,147,201,551
―
2,147,201,551
(Unit: share)
2019
2,147,201,551
―
2,147,201,551
Note: The shares issued by the Company are ordinary shares with no par value and outstanding shares are fully paid.
(2) Treasury stock, at cost
Changes in the number of treasury stock, at cost are as follows:
Balance at beginning of year
Changes during the year
Balance at end of year
2018
2019
(Unit: share)
1,059,870
433,590
1,493,460
1,493,460
662,862
2,156,322
Note: Shares in the Company held by the Board Incentive Plan Trust are included in the number of treasury stock.
(637,000 shares as of the date of transition to IFRS (April 1, 2017), 1,068,700 shares as of March 31, 2018, and 1,730,700 shares as of March 31, 2019)
86
Provisions、Common stock and other equity items
Notes to Consolidated Financial StatementsMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 (3) Capital surplus
In the Companies Act of Japan ("Companies Act"), it is stipulated that one half or more of the amount pertaining to
payment or benefits for the issuance of shares shall be included in common stock and the remainder shall be included in
capital reserve within capital surplus. Capital reserve can be transferred to common stock with a resolution of the
shareholders’ meeting.
(4) Retained earnings
The Companies Act requires that an amount equal to 10% of the surplus reduced by dividends of surplus be appropriated
as capital reserve or legal reserve included in retained earnings until the aggregated amount of capital reserve and the legal
reserve equals 25% of common stock. Legal reserve may be appropriated to cover deficit or reversed with a resolution of
the shareholders’ meeting.
(5) Accumulated other comprehensive income (loss)
Changes in each item of accumulated other comprehensive income (loss) are as follows:
2018
Yen (millions)
Exchange differences
on translating foreign
operations
Changes in fair value of
financial assets measured
at fair value through other
comprehensive income
Remeasurements of
defined benefit plans
Net changes
in the fair value
of cash flow hedges
Total
Balance at beginning of year
Net change in other comprehensive income
Reclassification to retained earnings
Balance at end of year
¥
¥
― ¥
101,129
¥
― ¥
37
¥
101,166
17,549
―
(509)
(8,668)
21,961
(21,961)
(46)
―
38,955
(30,629)
17,549
¥
91,952
¥
― ¥
(9)
¥
109,492
2019
Yen (millions)
Exchange differences
on translating foreign
operations
Changes in fair value of
financial assets measured
at fair value through other
comprehensive income
Remeasurements of
defined benefit plans
Net changes
in the fair value
of cash flow hedges
Total
Balance at beginning of year
Net change in other comprehensive income
Reclassification to retained earnings
Balance at end of year
¥
¥
17,549
¥
91,952
¥
― ¥
(9)
¥
109,492
(9,181)
―
(40,158)
3,709
12,050
(12,050)
(53)
―
8,368
¥
55,503
¥
― ¥
(62)
¥
(37,342)
(8,341)
63,809
2019
U.S. dollars (thousands)
Exchange differences
on translating foreign
operations
Changes in fair value of
financial assets measured
at fair value through other
comprehensive income
Remeasurements of
defined benefit plans
Net changes
in the fair value
of cash flow hedges
Total
Balance at beginning of year
Net change in other comprehensive income
Reclassification to retained earnings
Balance at end of year
$
$
158,099
$
828,396
$
― $
(81)
$
986,414
(82,712)
(361,784)
―
33,415
108,559
(108,559)
(477)
―
(336,414)
(75,144)
75,387
$
500,027
$
― $
(558)
$
574,856
Common stock and other equity items
87
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Net changes in other comprehensive income (loss) attributable to non-controlling interests are as follows:
Exchange differences on translating foreign operations
Changes in fair value of financial assets measured at fair value
through other comprehensive income
Remeasurements of defined benefit plans
Net changes in the fair value of cash flow hedges
Total
2018
Yen (millions)
2019
U.S. dollars
(thousands)
2019
1,306 ¥
(210)
$
(1,892)
65
(76)
(19)
83
(20)
6
748
(180)
54
1,276 ¥
(141)
$
(1,270)
¥
¥
22．Dividends
Dividends paid for the years ended March 31, 2018 and 2019 are as follows:
Resolution date
Total amount of dividends
Yen (millions)
Dividend per share
Yen
2018
April 28, 2017
Board of Directors Meeting
October 31, 2017
Board of Directors Meeting
¥
¥
38,642
30,054
Resolution date
Total amount of dividends
Yen (millions)
April 27, 2018
Board of Directors Meeting
October 29, 2018
Board of Directors Meeting
¥
¥
55,816
30,054
Resolution date
Total amount of dividends
U.S. dollars (thousands)
April 27, 2018
Board of Directors Meeting
October 29, 2018
Board of Directors Meeting
$
$
502,847
270,757
¥
¥
¥
¥
$
$
Record date
Effective date
March 31, 2017
June 2, 2017
September 30, 2017
December 4, 2017
18
14
2019
Dividend per share
Yen
Record date
Effective date
26
March 31, 2018
June 4, 2018
14
September 30, 2018
December 4, 2018
2019
Dividend per share
U.S. dollars
Record date
Effective date
0.234
March 31, 2018
June 4, 2018
0.126
September 30, 2018
December 4, 2018
Dividends with a record date in the year ended March 31, 2019 and the effective date in the next fiscal year are as
follows:
Resolution date
Total amount of dividends
Dividend per share
Record date
Effective date
April 26, 2019
Board of Directors Meeting
¥
Yen (millions)
55,816
¥
Yen
26
March 31, 2019
June 4, 2019
Resolution date
Total amount of dividends
Dividend per share
Record date
Effective date
U.S. dollars (thousands)
U.S. dollars
April 26, 2019
Board of Directors Meeting
$
502,847
$
0.234
March 31, 2019
June 4, 2019
88
Common stock and other equity items、Dividends
Notes to Consolidated Financial StatementsMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 23．Revenues
(1) Disaggregation of revenue
The Group’s business consists of 6 reportable segments: Energy and Electric Systems, Industrial Automation Systems,
Information and Communication Systems, Electronic Devices, Home Appliances and Others. Revenue is presented by
these categories since the Company's management periodically uses them for decision of business resources allocation
and evaluation of business operations.
Revenue is disaggregated by region according to the customer’s location. The relationship between these disaggregated
revenue and segment revenue are as follows:
Japan
2018
Overseas
Asia
Yen (millions)
Consolidated
Total
North America
(excluding Japan)
Europe
Others
total
Energy and Electric Systems
¥
822,769
¥
105,467
¥
277,392
¥
16,011
¥
23,302
¥
422,172
¥
1,244,941
Industrial Automation Systems
Information and Communication Systems
Electronic Devices
Home Appliances
Others
565,876
377,805
49,501
464,377
158,614
207,820
457,740
194,763
6,404
7,737
90,910
783
4,743
83,979
246,556
18,766
1,420
23,873
195,102
147
5,514
543
288
36,189
33
865,837
13,110
115,877
568,757
19,729
1,431,713
390,915
165,378
1,033,134
178,343
Consolidated total
¥
2,438,942
¥
419,121
¥ 1,089,176
¥
431,316
¥
65,869
¥
2,005,482
¥
4,444,424
Japan
2019
Overseas
Asia
Yen (millions)
Consolidated
Total
North America
(excluding Japan)
Europe
Others
total
Energy and Electric Systems
¥
876,378
¥
110,662
¥
257,538
¥
20,510
¥
22,636
¥
411,346
¥
1,287,724
Industrial Automation Systems
Information and Communication Systems
Electronic Devices
Home Appliances
Others
611,392
370,702
50,012
486,205
161,955
205,034
431,092
201,068
4,560
10,818
97,650
727
7,278
72,192
230,329
15,454
1,581
24,639
205,657
293
5,372
730
326
37,102
29
842,566
14,149
107,975
570,738
16,503
1,453,958
384,851
157,987
1,056,943
178,458
Consolidated total
¥
2,556,644
¥
429,451
¥ 1,013,883
¥
453,748
¥
66,195
¥
1,963,277
¥
4,519,921
Japan
2019
Overseas
Asia
U.S. dollars (thousands)
Consolidated
Total
North America
(excluding Japan)
Europe
Others
total
Energy and Electric Systems
$
7,895,297
$
996,955
$ 2,320,162
$
184,775
$
203,928
$
3,705,820
$
11,601,117
Industrial Automation Systems
5,508,036
1,847,153
3,883,713
1,811,423
48,396
7,590,685
13,098,721
Information and Communication Systems
Electronic Devices
Home Appliances
Others
3,339,658
450,559
4,380,225
1,459,054
41,081
97,459
65,567
650,378
14,243
221,973
6,577
2,937
127,468
972,747
879,730
2,075,036
1,852,766
334,252
5,141,784
6,550
139,225
2,640
261
148,676
3,467,126
1,423,306
9,522,009
1,607,730
Consolidated total
$
23,032,829
$ 3,868,928
$ 9,134,081
$ 4,087,820
$
596,351
$
17,687,180
$
40,720,009
The principal businesses and major products and services of each operating segment are shown in Note “6. Segment
information”.
The Group conducts business through 6 categories by aggregating multiple operating segments based on types and
characteristics of products, production methods, and similarities in market.
89
Revenues
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Revenue is accounted for according to Note “3. Significant accounting policies (13) Revenues”, and revenue recognition
methods for each categories are primarily as follows:
(a) Energy and Electric Systems, Information and Communication Systems
Major revenue recognition methods are as follows. Revenue is primarily recorded over time.
Many contracts related to the production of products qualify as specific construction contracts meeting certain criteria,
and revenue is recognized according to the progress of the construction if progress can be reasonably measured. Revenue
is recognized only to the extent of the cost incurred if progress cannot be reasonably measured. The progress of
construction is measured by comparing the cost incurred through the current year to the aggregate amount of estimated
cost. Estimates and underlying assumptions for the aggregate amount of estimated cost are reviewed on an ongoing basis
since there is a possibility that the cost incurred may change due to the progress of construction.
Revenue from maintenance agreements is recognized over the contract term as the maintenance is provided.
(b)Industrial Automation Systems, Electronic Devices, Home Appliances, Others
Major revenue recognition methods are as follows. Revenue is primarily recorded at a point in time.
Revenue from mass-produced goods such as home appliances, semiconductors and industrial products are recognized
at the time when the product is accepted by the customer.
Revenue from some products requiring acceptance inspection are recognized at the time when the product is received by
the customer and the functionality of the product is substantially demonstrated by the Company and its consolidated
subsidiaries.
(2) Contract liabilities
The amount of revenue recognized during the year that was included in the contract liability balance at the beginning of
each year is as follows:
2018
2019
2019
Yen (millions)
U.S. dollars (thousands)
Amount of the contract liability balance at the beginning of
the year recognized as revenue during the year
¥
113,780
¥
122,246
$
1,101,315
(3)Transaction price allocated to remaining performance obligations
The total amount of transaction price allocated to remaining performance obligations is 1,250,705 million yen as of March
31, 2018. The Company and its consolidated subsidiaries recognize this revenue primarily according to satisfaction of the
performance obligations. The period in which this revenue is expected to be recognized is from the years ending March 31,
2019 to 2040.
The total amount of transaction price allocated to remaining performance obligations is 1,306,385 million yen (11,769,234
thousand U.S. dollars) as of March 31, 2019. The Company and its consolidated subsidiaries recognize this revenue
primarily according to satisfaction of the performance obligations. The period in which this revenue is expected to be
recognized is from the years ending March 31, 2020 to 2040.
The Company and its consolidated subsidiaries apply the practical expedient in IFRS 15 paragraph 121(a) and do not
include contracts that have an original expected duration of one year or less in the total amount of the transaction price
allocated to remaining performance obligations.
90
Revenues
Notes to Consolidated Financial StatementsMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 24．Other profit (loss)
The major components of other profit (loss) are as follows:
Gain on sales of fixed assets
¥
645
¥
1,609
$
14,495
Impairment losses
(4,202)
(2,645)
(23,829)
2018
2019
2019
Yen (millions)
U.S. dollars (thousands)
25．Financial income and financial expenses
Components of financial income and financial expenses are as set out in the table below. Dividend income were related
to financial assets measured at fair value through other comprehensive income.
Financial income
Dividends
Interest income
Financial assets measured at amortized cost
Total
Financial expenses
Interest expenses
Financial liabilities measured at amortized cost
Exchange losses
Total
2,727
4,069
6,796
¥
¥
Note:Gains (losses) on derivative instruments not designated as hedges are included in exchange losses.
2018
2019
2019
Yen (millions)
U.S. dollars (thousands)
¥
5,467
¥
6,282
$
56,595
3,144
8,611
3,465
9,747
2,627
1,755
4,382
$
31,216
87,811
23,667
15,810
39,477
Other profit (loss)、Financial income and financial expenses
91
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 26．Other comprehensive income
The amount arising during the year on each item of other comprehensive income (loss), reclassification adjustments to
profit or loss and tax effects is as follows:
Before-tax
amount
2018
Tax
(expense) or
benefit
Yen (millions)
Net-of-tax
amount
Items that will not be reclassified to net profit
Changes in fair value of financial assets measured
at fair value through other comprehensive income
Amount arising during the year
¥
Net change during the year
Remeasurements of defined benefit plans
Amount arising during the year
Net change during the year
Share of other comprehensive income of
investments accounted for using the equity method
Amount arising during the year
Net change during the year
Items that may be reclassified to net profit
Exchange differences on translating foreign
operations
Amount arising during the year
Net change during the year
Net changes in the fair value of cash flow hedges
Amount arising during the year
Reclassification adjustments to net profit
Net change during the year
Share of other comprehensive income of
investments accounted for using the equity method
Amount arising during the year
Net change during the year
(744)
¥
(744)
¥
692
692
30,548
30,548
245
245
16,908
16,908
(265)
173
(92)
2,091
2,091
(9,225)
(9,225)
(75)
(75)
84
84
63
(42)
21
(222)
(222)
Other comprehensive income (loss)
¥
48,956
¥
(8,725)
¥
(52)
(52)
21,323
21,323
170
170
16,992
16,992
(202)
131
(71)
1,869
1,869
40,231
92
Other comprehensive income
Notes to Consolidated Financial StatementsMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Before-tax
amount
2019
Tax
(expense) or
benefit
Yen (millions)
Net-of-tax
amount
Items that will not be reclassified to net profit
Changes in fair value of financial assets measured
at fair value through other comprehensive income
Amount arising during the year
¥
(52,768)
¥
13,484
¥
Net change during the year
(52,768)
13,484
Remeasurements of defined benefit plans
Amount arising during the year
Net change during the year
Share of other comprehensive income of
investments accounted for using the equity method
Amount arising during the year
Net change during the year
Items that may be reclassified to net profit
Exchange differences on translating foreign
operations
Amount arising during the year
Net change during the year
Net changes in the fair value of cash flow hedges
Amount arising during the year
Reclassification adjustments to net profit
Net change during the year
Share of other comprehensive income of
investments accounted for using the equity method
Amount arising during the year
Net change during the year
17,559
17,559
(1,432)
(1,432)
(6,729)
(6,729)
(75)
24
(51)
(2,942)
(2,942)
(5,325)
(5,325)
437
437
(27)
(27)
23
(9)
14
297
297
Other comprehensive income (loss)
¥
(46,363)
¥
8,880
¥
(39,284)
(39,284)
12,234
12,234
(995)
(995)
(6,756)
(6,756)
(52)
15
(37)
(2,645)
(2,645)
(37,483)
Other comprehensive income
93
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Before-tax
amount
2019
Tax
(expense) or
benefit
Items that will not be reclassified to net profit
Changes in fair value of financial assets measured
at fair value through other comprehensive income
Amount arising during the year
$
(475,387)
$
121,477
$
Net change during the year
(475,387)
121,477
Remeasurements of defined benefit plans
Amount arising during the year
Net change during the year
Share of other comprehensive income of
investments accounted for using the equity method
Amount arising during the year
Net change during the year
Items that may be reclassified to net profit
Exchange differences on translating foreign
operations
Amount arising during the year
Net change during the year
Net changes in the fair value of cash flow hedges
Amount arising during the year
Reclassification adjustments to net profit
Net change during the year
Share of other comprehensive income of
investments accounted for using the equity method
Amount arising during the year
Net change during the year
158,189
158,189
(12,901)
(12,901)
(60,622)
(60,622)
(675)
216
(459)
(26,504)
(26,504)
(47,973)
(47,973)
3,937
3,937
(243)
(243)
207
(81)
126
2,676
2,676
Other comprehensive income (loss)
$
(417,684)
$
80,000
$
U.S. dollars (thousands)
Net-of-tax
amount
(353,910)
(353,910)
110,216
110,216
(8,964)
(8,964)
(60,865)
(60,865)
(468)
135
(333)
(23,828)
(23,828)
(337,684)
94
Other comprehensive income
Notes to Consolidated Financial StatementsMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 27．Earnings per share
Basic earnings per share and diluted earnings per share for net profit attributable to Mitsubishi Electric Corp. stockholders
are as follows:
Net profit attributable to Mitsubishi Electric Corp.
stockholders
Basic average ordinary shares outstanding
Basic earnings per share for net profit attributable to
Mitsubishi Electric Corp. stockholders
Diluted earnings per share for net profit attributable to
Mitsubishi Electric Corp. stockholders
2018
Yen (millions)
2019
U.S. dollars
(thousands)
2019
255,755
¥
226,648
$
2,041,874
2018
2,145,808,679
Shares
2019
2,145,198,524
2018
2019
119.19
119.19
¥
¥
Yen
105.65
105.65
U.S. dollars
2019
0.952
0.952
$
$
¥
¥
¥
Note: The number of the Company’s shares held through the Board Incentive Plan Trust were included in the shares of treasury stock that were deducted from
the average number of ordinary shares outstanding in the calculation of Earnings per share attributable to Mitsubishi Electric Corp. stockholders.
(969,077 shares as of March 31, 2018, and 1,577,931 shares as of March 31, 2019).
28．Financial instruments
(1) Capital management
The Company and its consolidated subsidiaries carry out capital management using ROE and the ratio of interest bearing
debt to total assets as continuing key performance indicators in order to establish a strong financial basis and enable further
business expansion globally. Capital is defined as equity (Mitsubishi Electric Corp. stockholders’ equity) as presented in the
Consolidated Statement of Financial Position.
ROE and the ratio of interest bearing debt to total assets are as set out in the table below. ROE is calculated as Net profit
attributable to Mitsubishi Electric Corp. stockholders divided by equity. The ratio of interest bearing debt to total assets is
calculated as bonds and borrowings divided by total assets.
Date of transition to IFRS
(April 1, 2017)
2018
2019
ROE
Ratio of interest bearing debt to total assets
―
8.8%
11.7%
7.2%
9.7%
6.9%
There are no significant capital regulations that apply to the Company and its consolidated subsidiaries.
(2) Financial risk management
In the course of their management activities, the Company and its consolidated subsidiaries face financial risks including
market risk, credit risk and liquidity risk, and carry out risk management to mitigate these risks.
(a) Market risk management
(i) Currency risk management
The Group is engaged in production and sales activities in various regions including Japan, North America, Europe, Asia
and other regions. Revenue and expenses as well as assets and liabilities denominated in foreign currencies may be
affected by foreign exchange rate fluctuations.
The Company and certain consolidated subsidiaries have entered into forward exchange contracts mainly to hedge cash
flows from foreign currency-denominated forecast transactions.
Currency risk exposure
The Company and its consolidated subsidiaries’ currency risk exposure (net) is primarily as set out in the table below.
Amounts for which currency risk is hedged using forward exchange contracts are excluded.
U.S. dollars
Euros
Yen (millions)
U.S. dollars (thousands)
2018
2019
2019
¥
¥
37,820
29,273
¥
¥
11,344
23,404
$
$
102,198
210,847
Earnings per share、Financial instruments
95
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Foreign exchange sensitivity analysis
With regards to foreign currency-denominated financial instruments held by the Company and its consolidated
subsidiaries, assuming that all variables other than foreign exchange are constant, the effect of a 1% increase in the value
of the yen against the U.S. dollar and euro on profit before income taxes in the Consolidated Statement of Profit or Loss are
as follows (negative values shown in parentheses):
U.S. dollars
Euros
Yen (millions)
U.S. dollars (thousands)
2018
2019
2019
¥
¥
(378)
(293)
¥
¥
(113)
(234)
$
$
(1,018)
(2,108)
(ii) Interest rate risk management
The Company and its consolidated subsidiaries may be affected by fluctuations in interest rates of borrowings with
variable interest.
The Company and its consolidated subsidiaries limit interest rate risk exposure by procuring most of their bonds and
borrowings with fixed interest rates.
Interest rate risk exposure
The interest rate risk exposure of the Company and its consolidated subsidiaries are as follows:
Yen (millions)
U.S. dollars (thousands)
Variable interest rate bonds and borrowings
¥
56,641
¥
55,682
$
501,640
2018
2019
2019
Interest rate sensitivity analysis
With regard to financial instruments held by the Company and its consolidated subsidiaries, assuming that all variables
other than interest rates are constant, the effect of a 1% increase in the interest rate on profit before income taxes in the
Consolidated Statement of Profit or Loss are as follows (negative values shown in parentheses):
2018
2019
2019
Yen (millions)
U.S. dollars (thousands)
Effect on profit before income taxes
¥
(566)
¥
(557)
$
(5,018)
(b) Credit risk management
Receivables arising from the operating activities of the Company and its consolidated subsidiaries may be affected by
changes in the financial conditions of customers.
The Company and its consolidated subsidiaries determine trade receivables and other receivables, to be in default if they
cannot be recovered in part or in full or recovery is considered extremely difficult.
In order to mitigate risk by setting transaction amount limits in line with credit risk, the Company and its consolidated
subsidiaries first conduct screening through external agencies and then, establish customer credit limits and regularly
monitor customers’ financial condition.
Derivative transactions with the purpose of mitigating market risk are carried out with highly reputable financial institutions
to minimize credit risk.
Excluding guarantees, the carrying amount after impairment of financial assets and contract assets presented in the
consolidated financial statements is the maximum exposure without taking account of collateral received for credit risk on
the financial assets and contract assets of the Company and its consolidated subsidiaries.
The Company and its consolidated subsidiaries have given guarantees to financial institutions related to transactions of
associates and employees as follows:
Guarantees of bank loan
Associates
Employees
Others
Total
2018
2019
2019
Yen (millions)
U.S. dollars (thousands)
¥
¥
532
¥
1,414
6,559
8,505
¥
50
1,002
6,257
7,309
$
$
450
9,027
56,369
65,846
Allowance for credit losses relating to performance of guarantee above is not recognized because the effect on the
consolidated financial statements is immaterial.
The amount of allowance for credit losses for trade receivables and contract assets is calculated by estimating the
lifetime expected credit losses until collection.
The amount of allowance for credit losses for other financial assets is in principle calculated by estimating 12-month
expected credit losses. However, allowance for credit losses for financial assets for which credit risk has increased
significantly since initial recognition or credit-impaired financial assets is calculated as an amount equal to lifetime expected
credit losses.
96
Financial instruments
Notes to Consolidated Financial StatementsMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 The amount of allowance for credit losses is calculated as follows:
-Trade receivables and contract assets
Grouping is performed based on credit risk rating, then receivables are multiplied by an allowance rate based on the
historical credit loss rate and adjusted for forecasts of future economic conditions. Further, trade receivables and contract
assets consists of a lot of homogenous customers, and their credit ratings are deemed to be identical.
.
-Other financial assets
For financial assets whose credit risk has not been determined to have increased significantly since initial recognition,
grouping is performed based on risks having similar characteristics, then cost is multiplied by an allowance rate based on
the historical credit loss rate and adjusted for forecasts of future economic conditions. However, for financial assets whose
credit risk has increased significantly since initial recognition and credit-impaired financial assets, the difference between
the present value of the amount expected to be recovered and adjusted for forecasts of future economic conditions, and
the carrying amount is used individually.
Changes in allowance for credit losses are as follows:
2018
Lifetime expected credit losses
12-month expected
credit losses
Financial assets always
measured at an amount
equal to lifetime
expected credit losses
Financial assets for
which credit risk has
increased significantly
since initial recognition
Credit-impaired financial
assets
Balance at beginning of year
¥
116
¥
Additions
Utilized
Reversed
Exchange
differences on
translating foreign
operations, others
1
―
―
―
5,728
6,125
(1,316)
(1,884)
(36)
¥
― ¥
―
―
―
―
¥
8,137
2,070
(4,776)
(1,268)
(1)
(37)
Balance at end of year
¥
117
¥
8,617
¥
― ¥
4,162
¥
12,896
2019
2019
Lifetime expected credit losses
12-month expected
credit losses
Financial assets always
measured at an amount
equal to lifetime
expected credit losses
Financial assets for
which credit risk has
increased significantly
since initial recognition
Credit-impaired financial
assets
Balance at beginning of year
¥
117
¥
Additions
Utilized
Reversed
Exchange
differences on
translating foreign
operations, others
1
―
(1)
―
8,617
5,085
(2,030)
(3,768)
(73)
¥
― ¥
―
―
―
―
¥
4,162
1,588
(614)
(1,002)
(7)
(80)
Yen (millions)
Total
13,981
8,196
(6,092)
(3,152)
Yen (millions)
Total
12,896
6,674
(2,644)
(4,771)
Balance at end of year
¥
117
¥
7,831
¥
― ¥
4,127
¥
12,075
Financial instruments
97
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 2019
2019
Lifetime expected credit losses
12-month expected
credit losses
Financial assets always
measured at an amount
equal to lifetime
expected credit losses
Financial assets for
which credit risk has
increased significantly
since initial recognition
Credit-impaired financial
assets
Balance at beginning of year
$
1,054
$
Additions
Utilized
Reversed
Exchange
differences on
translating foreign
operations, others
9
―
(9)
―
77,631
45,811
(18,288)
(33,946)
(658)
$
― $
―
―
―
―
U.S. dollars (thousands)
$
37,495
14,306
(5,532)
(9,027)
Total
116,180
60,126
(23,820)
(42,982)
(63)
(721)
Balance at end of year
$
1,054
$
70,550
$
― $
37,179
$
108,783
The carrying amounts (before deducting the allowance for credit losses) of financial assets and contract assets subject to
recognition of allowance for credit losses are as follows:
Lifetime expected credit losses
Financial assets
measured at an amount
equal to 12-month
expected credit losses
Financial assets always
measured at an amount
equal to lifetime
expected credit losses
Financial assets for
which credit risk has
increased significantly
since initial recognition
Credit-impaired financial
assets
Date of transition to IFRS
2018
2019
¥
¥
¥
75,432
80,129
84,232
1,161,194
1,200,146
1,241,747
―
―
―
9,831
6,107
6,156
¥
¥
¥
Yen (millions)
Total
1,246,457
1,286,382
1,332,135
Lifetime expected credit losses
U.S. dollars (thousands)
Financial assets
measured at an amount
equal to 12-month
expected credit losses
Financial assets always
measured at an amount
equal to lifetime
expected credit losses
Financial assets for
which credit risk has
increased significantly
since initial recognition
Credit-impaired financial
assets
Total
2019
$
758,847
11,186,910
―
55,459
$
12,001,216
(c) Liquidity risk management
The Company and its consolidated subsidiaries finance through borrowings from financial institutions and by issuing
bonds, which may be affected by deterioration in the financing environment.
In order to hedge the risk of not being able to make payment on financial liabilities by the due date, the Company and its
consolidated subsidiaries manage liquidity risk by preparing adequate funds for repayment, securing readily available lines
of credit from financial institutions and continuously monitoring planned and actual cash flows.
Balances of financial liabilities (including derivative instruments) classified by due dates are as set out in the table below.
Date of transition to IFRS (April 1, 2017)
Carrying amount
Contractual cash
flows
Within one year
One to five years
Over five years
Yen (millions)
¥
800,693
82,855
228,910
40,000
22,346
¥
800,693
83,381
233,300
40,592
25,239
¥
800,693
83,381
57,336
140
8,836
― ¥
―
133,800
40,452
16,355
―
―
42,164
―
48
4,383
4,383
4,383
―
―
¥
1,179,187
¥
1,187,588
¥
954,769
¥
190,607
¥
42,212
Non-derivatives financial liabilities
Trade payables and other financial liabilities ¥
Short-term borrowings
Long-term borrowings
Bonds
Lease obligations
Derivatives financial liabilities
Forward exchange contracts and
others
Total
98
Financial instruments
Notes to Consolidated Financial StatementsMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Non-derivatives financial liabilities
Trade payables and other financial liabilities ¥
Short-term borrowings
Long-term borrowings
Bonds
Lease obligations
Derivatives financial liabilities
Forward exchange contracts and
others
Total
Non-derivatives financial liabilities
Trade payables and other financial liabilities ¥
Short-term borrowings
Long-term borrowings
Bonds
Lease obligations
Derivatives financial liabilities
Forward exchange contracts and
others
Total
Non-derivatives financial liabilities
Trade payables and other financial liabilities $
Short-term borrowings
Long-term borrowings
Bonds
Lease obligations
Derivatives financial liabilities
Forward exchange contracts and
others
Total
Carrying amount
Contractual cash
flows
Within one year
One to five years
Over five years
2018
Yen (millions)
¥
741,714
56,507
193,961
40,000
21,482
¥
741,714
57,177
197,067
40,452
24,376
¥
741,714
57,177
59,932
140
8,731
― ¥
―
123,063
40,312
15,608
―
―
14,072
―
37
3,198
3,198
3,198
―
―
¥
1,056,862
¥
1,063,984
¥
870,892
¥
178,983
¥
14,109
Carrying amount
Contractual cash
flows
Within one year
One to five years
Over five years
2019
Yen (millions)
¥
717,277
55,580
180,392
40,000
22,466
¥
717,277
56,201
182,712
40,312
25,462
¥
717,277
56,201
22,000
20,140
9,302
― ¥
―
155,690
20,172
16,111
―
―
5,022
―
49
1,943
1,943
1,943
―
―
¥
1,017,658
¥
1,023,907
¥
826,863
¥
191,973
¥
5,071
Carrying amount
Contractual cash
flows
Within one year
One to five years
Over five years
2019
U.S. dollars (thousands)
6,461,955
500,721
1,625,153
360,360
202,397
$
6,461,955
506,315
1,646,054
363,171
229,388
$
6,461,955
506,315
198,198
181,441
83,802
$
― $
―
1,402,613
181,730
145,145
―
―
45,243
―
441
17,505
17,505
17,505
―
―
$
9,168,091
$
9,224,388
$
7,449,216
$
1,729,488
$
45,684
(3) Derivatives and hedging activities
The Company and its consolidated subsidiaries operate internationally, giving rise to significant exposure to market risks
from changes in foreign currencies and interest rates. Derivative instruments are comprised principally of forward exchange
contracts and currency swaps utilized by the Company and certain consolidated subsidiaries to reduce these risks. The
Company and certain consolidated subsidiaries do not hold or issue financial instruments for trading purposes. Currency
swaps are utilized to hedge changes in fair value, but are not designated as hedging instruments.
Financial instruments
99
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 (a) Cash flow hedges
The Company and certain consolidated subsidiaries have entered into forward exchange contracts mainly to hedge
market risk of claims and debts denominated in foreign currencies from foreign exchange rate fluctuations. The Company
and certain consolidated subsidiaries designate the forward exchange contracts as hedging instruments in cash flow
hedges. The Company and certain consolidated subsidiaries set an appropriate hedge ratio at the inception of the hedging
relationship based on the quantities of the hedged items and the hedging instruments. In principle, a one-to-one hedging
relationship is used. The significant conditions of the hedged items and the hedging instruments are in principal matched.
The Company and certain consolidated subsidiaries consider the period in which hedged cash flows are expected to
occur and the period in which those are expected to affect profit or loss are from April 2019 to June 2020.
The notional principal amount of forward exchange contracts designated as hedging instruments as of the date of
transition to IFRS, and the years ended March 31, 2018 and 2019 are as follows:
Yen (millions)
U.S. dollars (thousands)
Type of hedge
Date of transition to
IFRS
(April 1, 2017)
2018
2019
2019
Forward exchange contracts
¥
6,361
¥
5,850
¥
5,464
$
49,225
The fair value of forward exchange contracts designated as hedging instruments as of the date of transition to IFRS, and
the years ended March 31, 2018 and 2019 are as follows:
Yen (millions)
U.S. dollars (thousands)
Type of hedge
Line item
Forward exchange contracts Other financial assets
Date of transition
to IFRS
(April 1, 2017)
103
¥
Other financial liabilities
¥
49
2018
2019
2019
¥
¥
30
67
¥
¥
50
59
$
$
450
532
The amount of ineffective portion of hedges recognized in profit or loss is insignificant.
(4) Fair value of financial instruments
The Group classifies fair value measurements from level 1 to level 3 according to the observability of the inputs used in
measurement:
Level 1: quoted prices for identical assets or liabilities in active markets
Level 2: fair value calculated directly or indirectly using observable prices other than those in level 1
Level 3: fair value calculated using valuation techniques including unobservable inputs
A determination is made at the end of each consolidated fiscal year as to whether there are financial instruments for
which transfers between levels were carried out. There were no financial instruments with significant transfers between
levels in the years ended March 31, 2018 and 2019.
For financial instruments classified as level 3, changing the unobservable inputs to reasonably possible alternative
assumptions would not change the fair value significantly.
(a) Financial instruments measured at amortized cost
Methods of measurement of fair value, carrying amount and fair value of financial instruments measured at amortized
cost are as follows:
Bonds and borrowings (excluding short-term borrowings and lease obligations)
Fair values of bonds are calculated using the Reference Statistical Prices of the Japan Securities Dealers Association
and are classified as level 2 because fair value is calculated using observable market data. Fair values of borrowings are
calculated using the present value of future cash flows discounted by the expected interest rate for similar new contracts
and are classified as level 2 because fair value is calculated using observable market data.
100
Financial instruments
Notes to Consolidated Financial StatementsMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Date of transition to IFRS
(April 1, 2017)
2018
2019
2019
Carrying
amount
Fair value
Carrying
amount
Fair value
Carrying
amount
Fair value
Carrying
amount
Fair value
Yen (millions)
U.S. dollars (thousands)
Financial instruments
measured at amortized cost
Bonds and borrowings
¥ 268,910 ¥ 266,961 ¥ 233,961 ¥ 231,418 ¥ 220,392 ¥ 216,712
$ 1,985,513 $ 1,952,358
Note: The fair value of financial assets and financial liabilities measured at amortized cost other than the above approximated the carrying amounts.
(b) Financial instruments measured at fair value on a recurring basis
The method of measurement of fair value and fair value of financial instruments measured at fair value on a recurring
basis are as follows:
Equity instruments
The fair value of marketable equity instruments is calculated based on the market price at the end of the consolidated
fiscal year and are classified as level 1 because fair value is calculated using the market value of an identical asset in an
active market. The fair value of non-marketable equity instruments is calculated based on comprehensively taking into
consideration quantitative information on the net assets and other financial information of the investee and forecasts of its
future cash flows, and are classified as Level 3 because fair value is calculated based on valuation techniques using
unobservable indicators. The reasonableness of the valuation techniques has been verified by the department in charge
using various methods, and they have been approved by an appropriate management.
Debt financial instruments
Fair values of investment trusts are classified as level 2 because fair value is calculated as the market value of an
identical asset in an inactive market based on the market approach.
Derivative assets and liabilities
Fair values of derivatives are calculated based on market interest rates and market rates of foreign exchange banks as
financial assets or financial liabilities measured at fair value through profit or loss and are classified as level 2 because fair
value is calculated using observable market data.
Date of transition to IFRS (April 1, 2017)
Level 1
Level 2
Level 3
Total
Yen (millions)
Assets
Financial assets measured at fair
value through profit or loss
Debt instruments
Derivative assets
Financial assets measured at fair value
through other comprehensive income
Equity instruments
Total
Liabilities
Financial liabilities measured at fair
value through profit or loss
Derivative liabilities
Total
¥
¥
― ¥
―
198
¥
1,602
― ¥
―
198
1,602
290,297
290,297
―
1,800
58,628
58,628
348,925
350,725
―
― ¥
4,383
4,383
¥
―
― ¥
4,383
4,383
Financial instruments
101
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Assets
Financial assets measured at fair
value through profit or loss
Debt instruments
Derivative assets
Financial assets measured at fair value
through other comprehensive income
Equity instruments
Total
Liabilities
Financial liabilities measured at fair
value through profit or loss
Derivative liabilities
Total
2019
Assets
Financial assets measured at fair
value through profit or loss
Derivative assets
Financial assets measured at fair value
through other comprehensive income
Equity instruments
Total
Liabilities
Financial liabilities measured at fair
value through profit or loss
Derivative liabilities
Total
2019
Assets
Financial assets measured at fair
value through profit or loss
Derivative assets
Financial assets measured at fair value
through other comprehensive income
Equity instruments
Total
Liabilities
Financial liabilities measured at fair
value through profit or loss
Derivative liabilities
Total
¥
¥
¥
¥
$
$
2018
Yen (millions)
Level 1
Level 2
Level 3
Total
― ¥
―
197
¥
4,751
― ¥
―
197
4,751
260,889
260,889
―
4,948
60,240
60,240
321,129
326,077
―
― ¥
3,198
3,198
¥
―
― ¥
3,198
3,198
2019
Yen (millions)
Level 1
Level 2
Level 3
Total
― ¥
1,134
¥
― ¥
1,134
201,898
201,898
―
1,134
60,674
60,674
262,572
263,706
―
― ¥
1,943
1,943
¥
―
― ¥
1,943
1,943
Level 1
2019
Level 2
U.S. dollars (thousands)
Level 3
Total
― $
10,216
$
― $
10,216
1,818,902
1,818,902
―
10,216
546,613
546,613
2,365,514
2,375,730
―
― $
17,505
17,505
$
―
― $
17,505
17,505
102
Financial instruments
Notes to Consolidated Financial StatementsMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Changes in financial instruments measured at fair value on a recurring basis classified as Level 3 are as follows:
Balance at beginning of year
Gains (losses)
Purchases
Sale
Balance at end of year
2018
2019
2019
Yen (millions)
U.S. dollars (thousands)
¥
¥
58,628
¥
60,240
(496)
2,816
(708)
(953)
2,178
(791)
60,240
¥
60,674
$
$
542,703
(8,586)
19,622
(7,126)
546,613
Note: Gains (losses) are related to financial assets measured at fair value through other comprehensive income as of the end of the reporting period and
included in “Changes in fair value of financial assets measured at fair value through other comprehensive income” in the Consolidated Statement of
Comprehensive Income.
(5) Securitizations
The Company and its consolidated subsidiaries have transferred trade receivables and other receivables, to
unconsolidated securitization-purpose structured entities, and losses on securitization of 210 million yen and 225 million
yen (2,027 thousand U.S. dollars) were recorded in the years ended March 31, 2018 and 2019, respectively.
(a) Involvement with unconsolidated securitization-purpose structured entities
Unconsolidated securitization-purpose structured entities are used in the securitization of trade receivables and other
receivables. Because these entities are structured by third-party financial institutions who operate the entities as part of
their business and the entities purchase a large amount of assets from customers other than the Company, the ratio of
financial assets transferred by the Company to the entities’ total assets is low and the Company has therefore determined
that their assessed risk exposure has low relevance to the Company. The Company and its consolidated subsidiaries do
not provide significant non-contractual support to the structured entities. The Company’s involvement with the structured
entities primarily consists of the provision of limited credit quality enhancements, servicing the assets and the receipt of
commissions for services provided.
The transferred financial assets, in some cases, may be repurchased under limited and specific conditions. Losses on
securitization are expected to be all offset within a year and the maximum exposure as of the date of transition to IFRS
(April 1, 2017), March 31, 2018 and 2019 were 4,414 million yen , 5,799 million yen and 5,518 million yen (49,712 thousand
U.S. dollars), respectively.
(b) Transfer of financial assets that were derecognized in their entirety
Subsequent to securitization, the Company and its consolidated subsidiaries retain collection and administrative
responsibilities for the receivables. They have not recorded a servicing asset or liability since the cost of collection effort
approximates the amount of commission income. The maximum exposure to losses from continuing involvement on
financial assets derecognized as of March 31, 2019 was included in the maximum exposure to losses stated in (a)
Involvement with unconsolidated securitization-purpose structured entities above.
Financial instruments
103
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 29．Principal subsidiaries
The Company’s principal subsidiaries are as follows:
Reportable segment
Name of subsidiary
Toyo Electric Corporation
Mitsubishi Electric Control Panel Corp.
Mitsubishi Electric Building Techno-Service Co., Ltd.
Mitsubishi Electric Plant Engineering Corporation
Mitsubishi Electric Control Software Corporation
Ryoden Elevator Construction, Ltd.
Ryoko Co., Ltd.
Energy and Electric
Systems
RYO-SA BUILWARE Co., Ltd.
Mitsubishi Electric Power Products, Inc.
Mitsubishi Electric Saudi Ltd.
Mitsubishi Elevator Asia Co., Ltd.
Mitsubishi Electric Shanghai Electric Elevator Co., Ltd.
Mitsubishi Elevator Hong Kong Co., Ltd.
Taiwan Mitsubishi Elevator Co., Ltd.
Mitsubishi Elevator Korea Co., Ltd.
DB Seiko Co., Ltd.
Setsuyo Astec Corporation
Ryowa Corporation
Mitsubishi Electric Mechatronics Engineering Corporation
Meldas System Engineering Corporation
Mitsubishi Electric Mechatronics Software Corporation
Mitsubishi Electric Automotive America, Inc.
Industrial Automation
Systems
Mitsubishi Electric Automotive de Mexico, S.A. de C.V.
Mitsubishi Electric Thai Auto-Parts Co., Ltd.
Mitsubishi Electric Automotive (China) Co., Ltd.
Mitsubishi Electric Automation Manufacturing(Changshu) Co., Ltd.
Mitsubishi Electric Dalian Industrial Products Co., Ltd.
Mitsubishi Electric Automation (Hong Kong) Ltd.
SETSUYO ENTERPRISE CO., LTD.
Mitsubishi Electric Automation Korea Co., Ltd.
Mitsubishi Electric TOKKI Systems Corporation
Mitsubishi Precision Co., Ltd.
SPC Electronics Corporation
Information and
Communication
Systems
Mitsubishi Electric Information Network Corporation
Mitsubishi Electric Information Systems Corporation
Mitsubishi Space Software Co., Ltd.
Mitsubishi Electric Business Systems Co., Ltd.
Mitsubishi Electric Micro-Computer Application Software Co., Ltd.
Business
Location
Ownership
persentage of
voting rights
（％）
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
U.S.A.
Saudi Arabia
Thailand
China
China
Taiwan
Korea
Japan
Japan
Japan
Japan
Japan
Japan
U.S.A.
Mexico
Thailand
China
China
China
China
Taiwan
Korea
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
93.3
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
51.0
100.0
60.0
75.0
54.8
80.0
69.9
100.0
79.7
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
74.7
100.0
100.0
100.0
89.0
100.0
100.0
104
Significant subsidiaries
Notes to Consolidated Financial StatementsMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Reportable segment
Name of subsidiary
Electronic Devices
Melco Display Technology Inc.
Melco Power Device Corporation
Melco Semiconductor Engineering Corporation
Vincotech Holdings S.à r.l.
Mitsubishi Electric Lighting Corporation
Mitsubishi Electric Home Appliance Co., Ltd.
Mitsubishi Electric Living Environment Systems Corporation
Mitsubishi Electric Life Network Co., Ltd.
Mitsubishi Electric Air Conditioning &Refrigeration Equipment Sales
Co., Ltd.
Mitsubishi Electric Air Conditioning &Refrigeration Systems Co., Ltd.
Melco Facilities Corporation
Home Appliances
Mitsubishi Electric Hydronics & IT Cooling Systems S.p.A.
Mitsubishi Electric Air Conditioning Systems Europe Ltd.
Mitsubishi Electric Consumer Products (Thailand) Co., Ltd.
Siam Compressor Industry Co., Ltd.
Mitsubishi Electric Kang Yong Watana Co., Ltd.
Shanghai Mitsubishi Electric & Shangling Air-Conditioner and
Electric Appliance Co., Ltd.
Mitsubishi Electric (Guangzhou) Compressor Co., Ltd.
Mitsubishi Electric Air-Conditioning &Visual Information Systems
(Shanghai) Ltd.
Mitsubishi Electric Trading Corporation
Mitsubishi Electric Engineering Co., Ltd.
Mitsubishi Electric Logistics Corporation
Others
Mitsubishi Electric System & Service Co., Ltd.
Mitsubishi Electric Life Service Corporation
The Kodensha Co., Ltd.
iPLANET Inc.
Melco Trading (Thailand) Co.,Ltd.
Comprehensive
Sales Companies
C h i y o d a M i t s u b i s h i E l e c t r i c C o . , L t d . a n d o t h e r r e g i o n a l
comprehensive sales companies (9 companies)
Mitsubishi Electric US, Inc.
Mitsubishi Electric Europe B.V.
Mitsubishi Electric Asia Pte. Ltd.
Mitsubishi Electric & Electronics (Shanghai) Co., Ltd.
Mitsubishi Electric (H.K.) Ltd.
Mitsubishi Electric Taiwan Co., Ltd.
Mitsubishi Electric Australia Pty. Ltd.
Business
Location
Japan
Japan
Japan
Luxembourg
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Italy
U.K.
Thailand
Thailand
Thailand
China
China
China
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Thailand
Japan
U.S.A.
Netherlands
Singapore
China
China
Taiwan
Australia
Ownership
persentage of
voting rights
（％）
100.0
67.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
90.0
98.0
50.1
52.4
100.0
100.0
100.0
100.0
99.2
100.0
100.0
51.5
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
Companies that does not belong to one reportable segment (comprehensive sales companies with multi-segment
products) are listed as "comprehensive sales companies" as a reportable segment.
From the date of transition to IFRS (April 1, 2017) to the end of March 31, 2019, there were no significant changes in
principal subsidiaries and ownership persentages of voting rights of the principal subsidiaries.
Significant subsidiaries
105
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 30．Related parties
(1) Related party transactions
The balance of receivables and payables with associates and joint ventures are as follows:
Balance of trade receivables and contract assets
Associates
Joint ventures
Total
Balance of trade payables and contract liabilities
Associates
Joint ventures
Total
Date of transition
to IFRS
(April 1, 2017)
Yen (millions)
U.S. dollars (thousands)
2018
2019
2019
¥
50,569
¥
57,499
¥
64,712
$
582,991
15,192
65,761
20,526
8,835
19,502
77,001
17,774
9,014
20,324
85,036
17,050
9,939
183,099
766,090
153,603
89,541
¥
29,361
¥
26,788
¥
26,989
$
243,144
Other than the above, the balance of receivables under factoring transactions with joint ventures as of the date of
transition to IFRS (April 1, 2017), the years ended March 31, 2018 and 2019 are 9,498 million yen, 7,346 million yen and
6,613 million yen (59,577 thousand U.S. dollars), respectively. The balance of payables under factoring transactions with
joint ventures as of the date of transition to IFRS (April 1, 2017), the years ended March 31, 2018 and 2019 are 59,512
million yen, 40,590 million yen and 35,023 million yen (315,523 thousand U.S. dollars), respectively.
The amount of transactions with associates and joint ventures are as follows:
Revenue
Associates
Joint ventures
Total
Purchases
Associates
Joint ventures
Total
2018
2019
2019
Yen (millions)
U.S. dollars (thousands)
¥
242,412
¥
59,933
302,345
101,169
37,628
¥
138,797
¥
244,047
59,149
303,196
102,632
40,238
142,870
$
2,198,621
532,874
2,731,495
924,612
362,505
$
1,287,117
Other than the above, the amount of factoring transactions for trade receivables with joint ventures for the years ended
March 31, 2018 and 2019 are 67,471 million yen and 64,193 million yen (578,315 thousand U.S. dollars), respectively. The
amount of factoring transactions for trade payables with joint ventures for the years ended March 31, 2018 and 2019 are
171,447 million yen and 126,993 million yen (1,144,081 thousand U.S. dollars), respectively.
(2) Total key management personnel compensation
The amount of expenses recognized related to key management personnel compensation, for the years ended March 31,
2018 and 2019 are 3,613 million yen and 3,144 million yen (28,324 thousand U.S. dollars), respectively. This include
officers' retirement benefits of 344 million yen and 433 million yen (3,901 thousand U.S. dollars), respectively.
106
Related parties
Notes to Consolidated Financial StatementsMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 31．Commitments
Contractual commitments related to purchases of property, plant and equipment is as follows:
Date of transition
to IFRS
(April 1, 2017)
Yen (millions)
U.S. dollars (thousands)
2018
2019
2019
Contractual commitments related to purchases of
property, plant and equipment
¥
27,915
¥
27,671
¥
38,245
$
344,550
32．Contingent liabilities
There were no significant events as of March 31 2019.
33．Subsequent events
There were no significant subsequent events which should be disclosed as of the date of the approval of the consolidated
financial statements for the year ended March 31, 2019.
Commitments、Contingent liabilities、Subsequent events
107
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 34．First-time adoption
The Group adopted IFRS for the year ended March 31, 2019. The most recent consolidated financial statements
prepared in accordance with U.S. GAAP are for the year ended 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 that occurred on or before December 22, 2015 is recorded at the carrying amount in
accordance with U.S. GAAP. 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 reclassified 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 designate the classification of financial instruments on the
basis of the facts and circumstances that existed at the date of transition to IFRS.
(2) Reconciliations
Reconciliations for which disclosures are required on first time adoption of IFRS are set out below.
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”.
108
First-time adoption
Notes to Consolidated Financial StatementsMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Reconciliation of equity as at the Date of transition to IFRS (April 1, 2017)
Consolidated Statement of Financial Position
Presentation under U.S. GAAP
U.S. GAAP Reclassification
Assets
Current assets
Recognition and
measurement
differences
IFRS
Notes
Presentation under IFRS
(Assets)
Yen (millions)
Cash and cash equivalents
662,469
―
Trade receivables
1,037,201
(137,523)
―
―
662,469
Cash and cash equivalents
899,678
(1)(b)
Trade receivables
―
―
152,784
103,004
255,788
(1)(b)
Contract assets
39,801
―
39,801
(1)(a)
Other financial assets
Inventories
643,040
―
(83,138)
559,902
Inventories
Prepaid expenses and other
current assets
157,975
(52,000)
(15,056)
90,919
(1)(b)
Other current assets
Total current assets
2,500,685
3,062
4,810
2,508,557
Total current assets
Long-term receivables and
investments
Long-term trade receivables
2,815
(2,815)
421,455
(421,455)
―
―
― (1)(b)
― (1)(b)
Investments in securities
and other
Investments in affiliated
companies
197,480
(15,756)
5,634
187,358
(1)(b)
Investments accounted for
using the equity method
―
362,869
27,710
390,579
(1)(a),
(2)(b)
Other financial assets
Total long-term receivables
and investments
621,750
―
―
―
Property, plant and equipment
Land
Buildings
113,241
807,201
Machinery and equipment
1,891,377
Construction in progress
56,160
Total
Less accumulated
depreciation
Net property, plant and
equipment
2,867,979
(2,135,368)
732,611
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
(33,133)
699,478
143,439
(18,857)
124,582
162,169
111,316
273,485
Other assets
317,224
(231,513)
(31,720)
53,991
(2)(f),
(g)
(1)(b),
(2)(g),
(h)
(1)(b),
(2)(c)
(1)(b),
(2)(a)
Property, plant and
equipment
Goodwill and intangible
assets
Deferred tax assets
Other non-current assets
Total assets
4,172,270
―
65,760
4,238,030
Total assets
―
(3,062)
60,950
1,729,473
Total non-current assets
109
First-time adoption
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Presentation under U.S. GAAP
U.S. GAAP Reclassification
Recognition and
measurement
differences
IFRS
Notes
Presentation under IFRS
Yen (millions)
(Liabilities)
Liabilities
Current liabilities
Bank loans
60,868
63,500
21,987
146,355
(1)(c)
Bonds and borrowings
Current portion of long-term
debt
63,500
(63,500)
Trade payables
780,202
(145,119)
―
―
― (1)(c)
635,083
(1)(c)
Trade payables
―
―
150,048
562
150,610
(1)(c)
Contract liabilities
159,269
10,724
169,993
(1)(a)
Other financial liabilities
Accrued expenses
363,849
(115,491)
Accrued income taxes
26,295
―
―
130,183
―
―
―
248,358
(1)(c)
Accrued expenses
26,295
Accrued income taxes
130,183
(1)(c)
Provisions
Other current liabilities
231,047
(171,434)
(191)
59,422
(1)(c)
Other current liabilities
Total current liabilities
1,525,761
7,456
33,082
1,566,299
Total current liabilities
Long-term debt
Retirement and severance
benefits
227,756
194,990
―
―
―
―
―
227,756
Bonds and borrowings
8,044
203,034
(2)(a)
Net defined benefit liabilities
11,284
―
11,284
(1)(c)
Provisions
14,483
(1,621)
12,862
(1)(c),
(2)(c)
Deferred tax liabilities
Other liabilities
83,055
(33,223)
―
49,832
(1)(c)
Other non-current liabilities
―
(7,456)
6,423
504,768
Total non-current liabilities
Total liabilities
2,031,562
―
39,505
2,071,067
Total liabilities
Equity
Mitsubishi Electric Corp.
shareholders' equity
Common stock
Capital surplus
Legal reserve
(Equity)
175,820
212,530
―
―
―
175,820
Common stock
(13,785)
198,745
(2)(h)
Capital surplus
68,482
(68,482)
―
― (1)(c)
Retained earnings
1,586,075
68,482
(60,897)
1,593,660
103,218
101,166
(1)(c),
(2)(i)
(2)(a),
(b),(c),
(d),(e)
Retained earnings
Accumulated other
comprehensive income(loss)
―
(1,228)
Treasury stock, at cost
28,536
2,068,163
Mitsubishi Electric Corp.
stockholders’ equity
(2,281)
98,800
Non-controlling interests
26,255
2,166,963
Total equity
65,760
4,238,030
Total liabilities and equity
Accumulated other
comprehensive income (loss)
(2,052)
Treasury stock, at cost
(1,228)
Total Mitsubishi Electric Corp.
shareholders' equity
Noncontrolling interests
Total equity
2,039,627
101,081
2,140,708
Total liabilities and equity
4,172,270
―
―
―
―
―
―
110
First-time adoption
Notes to Consolidated Financial StatementsMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Reconciliation of equity as at the Date of transition to IFRS (April 1, 2017)
Consolidated Statement of Financial Position
Presentation under U.S. GAAP
U.S. GAAP Reclassification
Assets
Current assets
Recognition and
measurement
differences
U.S.dollars (thousands)
IFRS
Notes
Presentation under IFRS
(Assets)
Cash and cash equivalents
5,968,189
―
Trade receivables
9,344,153
(1,238,946)
―
―
5,968,189
Cash and cash equivalents
8,105,207
(1)(b)
Trade receivables
―
―
1,376,432
927,964
2,304,396
(1)(b)
Contract assets
358,568
―
358,568
(1)(a)
Other financial assets
Inventories
5,793,153
―
(748,991)
5,044,162
Inventories
Prepaid expenses and other
current assets
1,423,199
(468,468)
(135,641)
819,090
(1)(b)
Other current assets
Total current assets
22,528,694
27,586
43,332
22,599,612
Total current assets
Long-term receivables and
investments
Long-term trade receivables
25,360
(25,360)
3,796,892
(3,796,892)
―
―
― (1)(b)
― (1)(b)
Investments in securities
and other
Investments in afiliated
companies
1,779,099
(141,946)
50,757
1,687,910
(1)(b)
Investments accounted for
using the equity method
―
3,269,090
249,640
3,518,730
(1)(a),
(2)(b)
Other financial assets
Total long-term receivables
and investments
5,601,351
―
―
―
Property, plant and equipment
Land
Buildings
1,020,189
7,272,081
Machinery and equipment
17,039,432
Construction in progress
505,947
Total
Less accumulated
depreciation
Net property, plant and
equipment
25,837,649
(19,237,550)
6,600,099
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
(298,495)
6,301,604
―
1,292,243
(169,883)
1,122,360
―
1,460,982
1,002,847
2,463,829
Other assets
2,857,876
(2,085,703)
(285,768)
486,405
(2)(f),
(g)
(1)(b),
(2)(g),
(h)
(1)(b),
(2)(c)
(1)(b),
(2)(a)
Property, plant and
equipment
Goodwill and intangible
assets
Deferred tax assets
Other non-current assets
Total assets
37,588,020
―
592,430
38,180,450
Total assets
―
(27,586)
549,098
15,580,838
Total non-current assets
111
First-time adoption
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Presentation under U.S. GAAP
U.S. GAAP Reclassification
Liabilities
Current liabilities
Recognition and
measurement
differences
U.S.dollars (thousands)
IFRS
Notes
Presentation under IFRS
(Liabilities)
Bank loans
548,360
572,072
198,082
1,318,514
(1)(c)
Bonds and borrowings
Current portion of long-term
debt
572,072
(572,072)
Trade payables
7,028,847
(1,307,379)
―
―
― (1)(c)
5,721,468
(1)(c)
Trade payables
―
―
1,351,784
5,063
1,356,847
(1)(c)
Contract liabilities
1,434,856
96,613
1,531,469
(1)(a)
Other financial liabilities
Accrued expenses
3,277,919
(1,040,460)
Accrued income taxes
236,892
―
―
1,172,820
―
―
―
2,237,459
(1)(c)
Accrued expenses
236,892
Accrued income taxes
1,172,820
(1)(c)
Provisions
Other current liabilities
2,081,505
(1,544,450)
(1,722)
535,333
(1)(c)
Other current liabilities
Total current liabilities
13,745,595
67,171
298,036
14,110,802
Total current liabilities
Long-term debt
Retirement and severance
benefits
2,051,856
1,756,667
―
―
―
2,051,856
Bonds and borrowings
72,468
1,829,135
(2)(a)
Net defined benefit liabilities
―
―
101,658
―
101,658
(1)(c)
Provisions
130,477
(14,603)
115,874
(1)(c),
(2)(c)
Deferred tax liabilities
Other liabilities
748,243
(299,306)
―
448,937
(1)(c)
Other non-current liabilities
―
(67,171)
57,865
4,547,460
Total non-current liabilities
Total liabilities
18,302,361
―
355,901
18,658,262
Total liabilities
Equity
Mitsubishi Electric Corp.
shareholders' equity
Common stock
Capital surplus
Legal reserve
(Equity)
1,583,964
1,914,685
―
―
―
1,583,964
Common stock
(124,190)
1,790,495
(2)(h)
Capital surplus
616,955
(616,955)
―
― (1)(c)
Retained earnings
14,288,964
616,955
(548,622)
14,357,297
929,891
911,405
(1)(c),
(2)(i)
(2)(a),
(b),(c),
(d),(e)
Retained earnings
Accumulated other
comprehensive income(loss)
―
(11,063)
Treasury stock, at cost
257,079
18,632,098
Mitsubishi Electric Corp.
stockholders’ equity
(20,550)
890,090
Non-controlling interests
236,529
19,522,188
Total equity
592,430
38,180,450
Total liabilities and equity
Accumulated other
comprehensive income (loss)
(18,486)
Treasury stock, at cost
(11,063)
Total Mitsubishi Electric Corp.
shareholders' equity
18,375,019
Noncontrolling interests
910,640
Total equity
19,285,659
Total liabilities and equity
37,588,020
―
―
―
―
―
―
112
First-time adoption
Notes to Consolidated Financial StatementsMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Reconciliation of equity as of March 31, 2018
Consolidated Statement of Financial Position
Presentation under U.S. GAAP
U.S. GAAP Reclassification
Assets
Current assets
Recognition and
measurement
differences
IFRS
Notes
Presentation under IFRS
(Assets)
Yen (millions)
Cash and cash equivalents
599,199
―
Trade receivables
1,087,593
(164,926)
―
―
599,199
Cash and cash equivalents
922,667
(1)(b)
Trade receivables
―
―
179,151
89,711
268,862
(1)(b)
Contract assets
47,581
―
47,581
(1)(a)
Other financial assets
Inventories
741,782
―
(95,520)
646,262
Inventories
Prepaid expenses and other
current assets
177,919
(63,240)
(16,515)
98,164
(1)(b)
Other current assets
Total current assets
2,606,493
(1,434)
(22,324)
2,582,735
Total current assets
Long-term receivables and
investments
Long-term trade receivables
1,965
(1,965)
410,715
(410,715)
―
―
― (1)(b)
― (1)(b)
Investments in securities
and other
Investments in afiliated
companies
203,580
(15,752)
6,480
194,308
(1)(b)
Investments accounted for
using the equity method
―
335,474
27,697
363,171
(1)(a),
(2)(b)
Other financial assets
Total long-term receivables
and investments
616,260
―
―
―
Property, plant and equipment
Land
Buildings
112,647
852,574
Machinery and equipment
1,964,737
Construction in progress
43,313
Total
Less accumulated
depreciation
Net property, plant and
equipment
2,973,271
(2,232,823)
740,448
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
(16,191)
724,257
150,375
(17,415)
132,960
142,093
100,605
242,698
Other assets
301,358
(198,076)
(37,831)
65,451
(2)(f),
(g)
(1)(b),
(2)(g),
(h)
(1)(b),
(2)(c)
(1)(b),
(2)(a)
Property, plant and
equipment
Goodwill and intangible
assets
Deferred tax assets
Other non-current assets
Total assets
4,264,559
―
41,021
4,305,580
Total assets
―
1,434
63,345
1,722,845
Total non-current assets
113
First-time adoption
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Presentation under U.S. GAAP
U.S. GAAP Reclassification
Recognition and
measurement
differences
IFRS
Notes
Presentation under IFRS
Yen (millions)
(Liabilities)
Liabilities
Current liabilities
Bank loans
56,042
66,388
465
122,895
(1)(c)
Bonds and borrowings
Current portion of long-term
debt
66,388
(66,388)
Trade payables
719,404
(139,838)
―
―
― (1)(c)
579,566
(1)(c)
Trade payables
―
―
157,139
(3,217)
153,922
(1)(c)
Contract liabilities
154,350
10,996
165,346
(1)(a)
Other financial liabilities
Accrued expenses
361,948
(100,556)
Accrued income taxes
33,179
―
Other current liabilities
234,406
(179,866)
―
117,357
―
―
―
52
261,392
(1)(c)
Accrued expenses
33,179
Accrued income taxes
117,357
(1)(c)
Provisions
54,592
(1)(c)
Other current liabilities
Total current liabilities
1,471,367
8,586
8,296
1,488,249
Total current liabilities
Long-term debt
Retirement and severance
benefits
Other liabilities
189,055
171,017
―
―
―
―
5,856
9,989
―
189,055
Bonds and borrowings
503
171,520
(2)(a)
Net defined benefit liabilities
―
5,856
(1)(c)
Provisions
(852)
9,137
(1)(c),
(2)(c)
Deferred tax liabilities
68,975
(24,431)
―
44,544
(1)(c)
Other non-current liabilities
―
(8,586)
(349)
420,112
Total non-current liabilities
Total liabilities
1,900,414
―
7,947
1,908,361
Total liabilities
Equity
Mitsubishi Electric Corp.
shareholders' equity
Common stock
Capital surplus
Legal reserve
(Equity)
175,820
213,250
―
―
―
175,820
Common stock
(13,808)
199,442
(2)(h)
Capital surplus
69,382
(69,382)
―
― (1)(c)
Retained earnings
1,788,359
69,382
(46,393)
1,811,348
95,020
109,492
(1)(c),
(2)(i)
(2)(a),
(b),(c),
(d),(e)
Retained earnings
Accumulated other
comprehensive income(loss)
―
(1,928)
Treasury stock, at cost
34,819
2,294,174
Mitsubishi Electric Corp.
stockholders’ equity
(1,745)
103,045
Non-controlling interests
33,074
2,397,219
Total equity
41,021
4,305,580
Total liabilities and equity
Accumulated other
comprehensive income (loss)
14,472
Treasury stock, at cost
(1,928)
Total Mitsubishi Electric Corp.
shareholders' equity
Noncontrolling interests
Total equity
2,259,355
104,790
2,364,145
Total liabilities and equity
4,264,559
―
―
―
―
―
―
114
First-time adoption
Notes to Consolidated Financial StatementsMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Reconciliation of equity as of March 31, 2018
Consolidated Statement of Financial Position
Presentation under U.S. GAAP
U.S. GAAP Reclassification
Assets
Current assets
Recognition and
measurement
differences
U.S.dollars (thousands)
IFRS
Notes
Presentation under IFRS
(Assets)
Cash and cash equivalents
5,398,189
―
Trade receivables
9,798,135
(1,485,820)
―
―
5,398,189
Cash and cash equivalents
8,312,315
(1)(b)
Trade receivables
―
―
1,613,973
808,207
2,422,180
(1)(b)
Contract assets
428,658
―
428,658
(1)(a)
Other financial assets
Inventories
6,682,721
―
(860,541)
5,822,180
Inventories
Prepaid expenses and other
current assets
1,602,874
(569,730)
(148,784)
884,360
(1)(b)
Other current assets
Total current assets
23,481,919
(12,919)
(201,118)
23,267,882
Total current assets
Long-term receivables and
investments
Long-term trade receivables
17,703
(17,703)
3,700,135
(3,700,135)
―
―
― (1)(b)
― (1)(b)
Investments in securities
and other
Investments in afiliated
companies
1,834,054
(141,910)
58,379
1,750,523
(1)(b)
Investments accounted for
using the equity method
―
3,022,288
249,523
3,271,811
(1)(a),
(2)(b)
Other financial assets
Total long-term receivables
and investments
5,551,892
―
―
―
Property, plant and equipment
Land
Buildings
1,014,838
7,680,847
Machinery and equipment
17,700,333
Construction in progress
390,207
Total
Less accumulated
depreciation
Net property, plant and
equipment
26,786,225
(20,115,523)
6,670,702
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
(145,864)
6,524,838
―
1,354,730
(156,892)
1,197,838
―
1,280,117
906,351
2,186,468
Other assets
2,714,937
(1,784,468)
(340,820)
589,649
(2)(f),
(g)
(1)(b),
(2)(g),
(h)
(1)(b),
(2)(c)
(1)(b),
(2)(a)
Property, plant and
equipment
Goodwill and intangible
assets
Deferred tax assets
Other non-current assets
Total assets
38,419,450
―
369,559
38,789,009
Total assets
―
12,919
570,677
15,521,127
Total non-current assets
115
First-time adoption
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Presentation under U.S. GAAP
U.S. GAAP Reclassification
Liabilities
Current liabilities
Recognition and
measurement
differences
U.S.dollars (thousands)
IFRS
Notes
Presentation under IFRS
(Liabilities)
Bank loans
504,883
598,090
4,189
1,107,162
(1)(c)
Bonds and borrowings
Current portion of long-term
debt
598,090
(598,090)
Trade payables
6,481,117
(1,259,802)
―
―
― (1)(c)
5,221,315
(1)(c)
Trade payables
―
―
1,415,667
(28,982)
1,386,685
(1)(c)
Contract liabilities
1,390,541
99,064
1,489,605
(1)(a)
Other financial liabilities
Accrued expenses
3,260,793
(905,910)
Accrued income taxes
298,910
―
―
1,057,270
―
―
―
2,354,883
(1)(c)
Accrued expenses
298,910
Accrued income taxes
1,057,270
(1)(c)
Provisions
Other current liabilities
2,111,766
(1,620,414)
468
491,820
(1)(c)
Other current liabilities
Total current liabilities
13,255,559
77,352
74,739
13,407,650
Total current liabilities
Long-term debt
Retirement and severance
benefits
Other liabilities
1,703,198
1,540,694
―
―
―
―
―
1,703,198
Bonds and borrowings
4,531
1,545,225
(2)(a)
Net defined benefit liabilities
52,757
―
52,757
(1)(c)
Provisions
89,990
(7,675)
82,315
(1)(c),
(2)(c)
Deferred tax liabilities
621,396
(220,099)
―
401,297
(1)(c)
Other non-current liabilities
―
(77,352)
(3,144)
3,784,792
Total non-current liabilities
Total liabilities
17,120,847
―
71,595
17,192,442
Total liabilities
Equity
Mitsubishi Electric Corp.
shareholders' equity
Common stock
Capital surplus
Legal reserve
(Equity)
1,583,964
1,921,171
―
―
―
1,583,964
Common stock
(124,397)
1,796,774
(2)(h)
Capital surplus
625,063
(625,063)
―
― (1)(c)
Retained earnings
16,111,342
625,063
(417,955)
16,318,450
856,037
986,415
(1)(c),
(2)(i)
(2)(a),
(b),(c),
(d),(e)
Retained earnings
Accumulated other
comprehensive income(loss)
―
(17,369)
Treasury stock, at cost
313,685
20,668,234
Mitsubishi Electric Corp.
stockholders’ equity
(15,721)
928,333
Non-controlling interests
297,964
21,596,567
Total equity
369,559
38,789,009
Total liabilities and equity
Accumulated other
comprehensive income (loss)
130,378
Treasury stock, at cost
(17,369)
Total Mitsubishi Electric Corp.
shareholders' equity
20,354,549
Noncontrolling interests
944,054
Total equity
21,298,603
Total liabilities and equity
38,419,450
―
―
―
―
―
―
116
First-time adoption
Notes to Consolidated Financial StatementsMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Notes to reconciliation of equity
The principal effects of transition to IFRS in the
Under IFRS, all equity instruments are recognized at fair
value irrespective of whether there is an active market.
reconciliation of equity above are as follows:
Since it is permitted to recognize changes in fair value in
(1) Reclassification
The main elements of reclassification are as follows:
other comprehensive income (loss), the Company and its
consolidated subsidiaries have elected to recognize
changes in fair value of equity instruments in other
a. In accordance with the presentation provisions under
comprehensive income (loss). Accordingly, impairment
IFRS, other financial assets and other financial liabilities
l o s s e s a n d g a i n s o r l o s s e s o n t h e s a l e o f e q u i t y
are presented separately.
instruments recognized in profit or loss under U.S. GAAP
b. Part of trade receivables, prepaid expenses and other
are recognized in other comprehensive income as well.
current assets and other assets are reclassified based
on the definition and recognition criteria of IFRS.
c. Part of trade payables, accrued expenses, other current
c. Income taxes
Under U.S. GAAP, tax expenses incurred by sellers are
liabilities and other non-current liabilities are reclassified
deferred using the deferred method for differences arising
based on the definition and recognition criteria of IFRS.
from unrealized profits and losses from intercompany
(2) Reconciliation and measurement differences
The main elements of recognition and measurement
differences are as follows:
a. Employee benefits
Under U.S. GAAP, actuarial gains and losses and past
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 method. A deferred tax
asset is recognized for the future deductible temporary
s e r v i c e c o s t s a r e d e f e r r e d i n a c c u m u l a t e d o t h e r
difference using the purchaser’s effective tax rate while
comprehensive income (loss), subsequently amortized for
a specified future period and recognized in profit or loss.
taking its recoverability into consideration.
Under U.S. GAAP, deferred tax liabilities for temporary
Current service costs, interest costs and expected return
differences associated with investments in equity method
on plan assets are recognized in profit or loss for the
investees are recognized using tax rates applicable on the
consolidated fiscal year.
Under IFRS, defined benefit obligations and plan assets
premise that the temporary difference will be reversed at
the time of sale of the equity method investees even if a
relating to defined benefit corporate pension plans and
company intends to continue to hold the investments. In
lump-sum payment plans are remeasured in accordance
principle, deferred tax liabilities are recognized for the
w i t h I F R S r e q u i r e m e n t s . C h a n g e s r e s u l t i n g f r o m
remeasurement are recognized in accumulated other
undistributed earnings of subsidiaries.
Under IFRS, deferred tax liabilities are in principle
comprehensive income (loss), and reclassified directly
recognized for all the taxable temporary differences using
from accumulated other comprehensive income (loss) to
tax rates applied when the taxable temporary differences
retained earnings, not through profit or loss. Past service
reverse, such as when receiving dividends or selling the
costs arising from plan amendments are fully recognized
investments. Deferred tax liabilities are recognized for the
immediately in profit or loss. Current service costs are
taxable temporary differences associated with investments
recognized in profit or loss. Interest costs are recognized in
in subsidiaries and others which are probable to reverse in
profit or loss at the amount determined by multiplying the
the foreseeable future.
net amount of the defined benefit obligation and plan
assets by the discount rate used to determine the present
value of the obligation.
d. Exchange differences on translating foreign operations
Cumulative exchange differences on translating foreign
operations are all deemed to be zero at the date of
b. Equity instruments
Under U.S. GAAP, non-marketable equity instruments
transition to IFRS. Consequently, exchange differences on
translating foreign operations included in accumulated
are recognized at their cost. If fair value of financial assets
other comprehensive income as at the transition date were
has decreased and the decrease is considered not to be
fully reclassified to retained earnings.
temporary, impairment losses are recognized for the
amount of the cost of the financial assets in excess of fair
value. Gains or losses on the sale of these financial assets
e. Exclusion of equity method investees
Under U.S. GAAP, when an investee no longer qualifies
are recognized in profit or loss.
as an equity method investee, the difference between the
117
First-time adoption
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 sale price and the carrying amount of the interest sold is
recognized in profit or loss. If an investor retains a residual
h. Business combinations
Under U.S. GAAP, in business combinations, the
interest, gains or losses recognized in prior periods remain
acquirer measures the acquiree as a whole (including non-
included in the carrying amount of the residual interest.
Under IFRS, when an investee no longer qualifies as an
equity method investee, any residual interest is measured
at fair value. The difference between the sum of the sales
controlling interests) at fair value and goodwill is
recognized including the portion of goodwill attributable to
the non-controlling interests.
Under IFRS, in business combinations, it is permitted to
price and the fair value of the residual interest and the
elect to apply either of two methods: the acquirer
carrying amount of the interest at the point when an
measures the acquiree as a whole (including non-
investee no longer qualifies as an equity method investee
controlling interests) at fair value and goodwill is
is recognized in profit or loss.
recognized including the portion of goodwill attributable to
the non-controlling interests; or non-controlling interests
f. Government grants
Under U.S. GAAP, government grants related to
are measured as a proportional interest in the fair value of
the acquiree's net identifiable assets and goodwill is
acquisition of assets are not reflected in the carrying
recognized only for the acquirer’s share. The Company
amounts of assets because there are no accounting
elected the method of measuring non-controlling interest
standards for such government grants.
Under IFRS, government grants related to assets are
as a proportional interest in the fair value of the acquiree's
net identifiable assets and recognizing goodwill only for the
recognized as deducting the carrying amount of the asset
acquirer’s share. Capital surplus is recognized when non-
by the government grants received.
controlling interests are additionally acquired after the date
when control was obtained.
g. Impairment of non-financial assets
Under U.S. GAAP, if there is an indication that a non-
current asset may be impaired, the carrying amount and
the undiscounted estimated future cash flows of the asset
are compared. If the carrying amount exceeds the
estimated future cash flows, any excess of the carrying
amount over the fair value is recognized as impairment
losses.
Under IFRS, if there is an indication that a non-current
asset may be impaired, any excess of the carrying amount
over the recoverable amount of the non-current asset (the
higher of value in use or fair value less costs of disposal) is
recognized as impairment losses of the non-current asset.
As of the date of transition to IFRS, property, plant and
equipment, intangible assets and other assets, decreased
by 18,605 million yen (167,612 thousand U.S. dollars) and
4,162 million yen (37,495 thousand U.S. dollars),
respectively, due to the recognition of impairment losses.
The impairment losses include 16,875 million yen (152,027
thousand U.S. dollars) for assets belonging to the Energy
and Electric Systems segment, mainly at a certain part of
the power systems business in North America due to a
decline in profitability. The recoverable amount related to
the impairment losses is measured at fair value less costs
of disposal based on the market approach, and market
transaction price of similar assets is used for the
measurement (level 3 in the fair value hierarchy).
118
First-time adoption
Notes to Consolidated Financial StatementsMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 i. Retained earnings and capital surplus
Major amounts of the impact on retained earnings and
capital surplus (net of tax, except income taxes) are as
follows:
Date of transition
to IFRS
(April 1, 2017)
Yen (millions)
2018
(184,627)
(167,743)
38,319
57,485
38,893
53,462
18,535
18,535
24,188
17,504
Employee benefits
Equity instruments
Income taxes
Exchange differences on
translating foreign
operations
Exclusion of equity method
investees
Government grants
(11,633)
(11,458)
Impairment of non-financial
assets
(13,003)
(2,665)
Others
9,839
7,079
Total retained earnings
(60,897)
(46,393)
Business combinations
and others
(13,785)
(13,808)
Total capital surplus
(13,785)
(13,808)
U.S.dollars (thousands)
Date of transition
to IFRS
(April 1, 2017)
2018
(1,663,306)
(1,511,198)
345,216
517,883
350,387
481,640
166,982
166,982
217,910
157,694
Employee benefits
Equity instruments
Income taxes
Exchange differences on
translating foreign
operations
Exclusion of equity method
investees
Government grants
(104,802)
(103,225)
Impairment of non-financial
assets
(117,144)
(24,009)
Others
88,639
63,774
Total retained earnings
(548,622)
(417,955)
Business combinations
and others
(124,190)
(124,397)
Total capital surplus
(124,190)
(124,397)
First-time adoption
119
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Reconciliation of profit or loss and comprehensive income for the year ended March 31,2018
(From April 1, 2017 to March 31, 2018)
Consolidated Statement of Profit or Loss
Presentation under U.S. GAAP
U.S. GAAP Reclassification
IFRS
Notes
Presentation under IFRS
Yen (millions)
Recognition and
measurement
differences
Net sales
4,431,198
―
13,226
4,444,424
(2)(a) Revenue
Cost of sales and expenses
Cost of sales
3,030,902
―
59,547
3,090,449
(1)(c),
(2)(a)
Cost of sales
Selling, general and
administrative expenses
868,812
193,695
(41,146)
1,021,361
(1)(b),
(c)
Selling, general and
administrative expenses
Research and development
192,966
(192,966)
Loss on impairment of long-
lived assets
19,881
(19,881)
―
―
― (1)(b)
― (1)(c)
Operating income
318,637
(1,838)
10,645
327,444
Operating profit
―
(20,990)
15,820
(5,170)
(1)(c) Other profit (loss)
Other income
Interest and dividends
8,611
23,637
(23,637)
8,611
(1)(a),
(2)(b)
Financial income
Equity in earnings of affiliated
companies
22,261
(22,261)
Other
29,542
(29,542)
―
―
― (1)(c)
― (1)(c)
Other expenses
Interest
Other
2,727
4,726
(657)
6,796
(1)(a)
Financial expenses
11,746
(11,746)
―
― (1)(c)
―
22,261
1,686
23,947
(1)(c)
Share of profit of investments
accounted for using the equity
method
Income before income taxes
364,578
(723)
(10,649)
353,206
Profit before income taxes
Income taxes
Current
Deferred
62,213
19,303
5,291
86,807
(1)(c),
(d)
Income taxes
20,026
(20,026)
―
― (1)(d)
Net income
282,339
―
(15,940)
266,399
Net profit
Net profit 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
120
First-time adoption
Notes to Consolidated Financial StatementsMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Reconciliation of profit or loss and comprehensive income for the year ended March 31,2018
(From April 1, 2017 to March 31, 2018)
Consolidated Statement of Profit or Loss
Presentation under U.S. GAAP
U.S. GAAP Reclassification
U.S.dollars (thousands)
IFRS
Notes
Presentation under IFRS
Recognition and
measurement
differences
Net sales
39,920,703
―
119,153
40,039,856
(2)(a) Revenue
Cost of sales and expenses
Cost of sales
27,305,423
―
536,460
27,841,883
(1)(c),
(2)(a)
Cost of sales
Selling, general and
administrative expenses
7,827,135
1,744,999
(370,684)
9,201,450
(1)(b),
(c)
Selling, general and
administrative expenses
Research and development
1,738,432
(1,738,432)
Loss on impairment of long-
lived assets
179,108
(179,108)
―
―
― (1)(b)
― (1)(c)
Operating income
2,870,605
(16,558)
95,899
2,949,946
Operating profit
―
(189,099)
142,522
(46,577)
(1)(c) Other profit (loss)
Other income
Interest and dividends
77,577
212,946
(212,946)
77,577
(1)(a),
(2)(b)
Financial income
Equity in earnings of affiliated
companies
200,550
(200,550)
Other
266,144
(266,144)
―
―
― (1)(c)
― (1)(c)
Other expenses
Interest
Other
24,568
42,577
(5,920)
61,225
(1)(a)
Financial expenses
105,820
(105,820)
―
― (1)(c)
―
200,550
15,189
215,739
(1)(c)
Equity in earnings of associate
companies
Income before income taxes
3,284,488
(6,513)
(95,938)
3,182,037
Profit before income taxes
Income taxes
Current
Deferred
560,477
173,901
47,667
782,045
(1)(c),
(d)
Income taxes
180,414
(180,414)
―
― (1)(d)
Net income
2,543,597
―
(143,605)
2,399,992
Net profit
Net income attributable to the
noncontrolling interests
94,225
―
1,667
95,892
Non-controlling interests
Net profit attributable to:
Net income attributable to
Mitsubishi Electric Corp.
2,449,372
―
(145,272)
2,304,100
Mitsubishi Electric Corp.
stockholders
121
First-time adoption
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Consolidated Statement of Comprehensive Income
Presentation under U.S. GAAP
U.S. GAAP Reclassification
IFRS
Notes
Presentation under IFRS
Yen (millions)
Recognition and
measurement
differences
Net income
282,339
―
(15,940)
266,399
Net profit
Other comprehensive income
(loss), net of tax
Unrealized gains (losses) on
securities
(14,875)
392
14,431
Other comprehensive income
(loss), net of tax
Items that will not be
reclassified to net profit
(52)
(1)(e),
(2)(b)
Changes in fair value of
financial assets measured
at fair value through other
comprehensive income
Pension liability adjustments
15,857
(596)
6,062
21,323
(1)(e)
―
204
(34)
170
(1)(e)
Foreign currency translation
adjustments
Unrealized gains (losses) on
derivative instruments
17,023
(1,908)
1,877
16,992
(1)(e)
(88)
(6)
23
(71)
(1)(e)
―
1,914
(45)
1,869
(1)(e)
Remeasurements of defined
benefit pension plans
Share of other
comprehensive income of
investments accounted for
using the equity method
Items that may be reclassified
to net profit
Exchange differences on
translating foreign
operations
Net changes in the fair value
of cash flow hedges
Share of other
comprehensive income of
investments accounted for
using the equity method
Total
17,917
Comprehensive income
300,256
―
―
22,314
40,231
Total other comprehensive
income (loss)
6,374
306,630
Comprehensive income
Comprehensive income
attributable to:
Comprehensive income
attributable to the non-controlling
interests
11,852
―
68
11,920
Non-controlling interests
Comprehensive income
attributable to Mitsubishi Electric
Corp.
288,404
―
6,306
294,710
Mitsubishi Electric Corp.
stockholders
122
First-time adoption
Notes to Consolidated Financial StatementsMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Consolidated Statement of Comprehensive Income
Presentation under U.S. GAAP
U.S. GAAP Reclassification
U.S.dollars (thousands)
IFRS
Notes
Presentation under IFRS
Recognition and
measurement
differences
Net income
2,543,597
―
(143,605)
2,399,992
Net profit
Other comprehensive income
(loss), net of tax
Unrealized gains (losses) on
securities
(134,009)
3,532
130,009
(468)
(1)(e),
(2)(b)
Pension liability adjustments
142,856
(5,369)
54,612
192,099
(1)(e)
―
1,837
(305)
1,532
(1)(e)
Foreign currency translation
adjustments
Unrealized gains (losses) on
derivative instruments
153,360
(17,189)
16,910
153,081
(1)(e)
(793)
(54)
207
(640)
(1)(e)
―
17,243
(405)
16,838
(1)(e)
Other comprehensive income
(loss), net of tax
Items that will not be
reclassified to net profit
Changes in fair value of
financial assets measured
at fair value through other
comprehensive income
Remeasurements of defined
benefit pension plans
Share of other
comprehensive income of
investments accounted for
using the equity method
Items that may be reclassified
to net profit
Exchange differences on
translating foreign
operations
Net changes in the fair value
of cash flow hedges
Share of other
comprehensive income of
investments accounted for
using the equity method
Total
161,414
Comprehensive income
2,705,011
―
―
201,028
362,442
Total other comprehensive
income (loss)
57,423
2,762,434
Comprehensive income
Comprehensive income
attributable to:
Comprehensive income
attributable to the non-controlling
interests
106,775
―
612
107,387
Non-controlling interests
Comprehensive income
attributable to Mitsubishi Electric
Corp.
2,598,236
―
56,811
2,655,047
Mitsubishi Electric Corp.
stockholders
First-time adoption
123
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Notes to reconciliation of profit or loss and
Consequently, revenue and cost of sales in the
comprehensive income
The principal effects of transition to IFRS in the
reconciliation of profit or loss and comprehensive income
above are as follows:
Consolidated Statement of Profit or Loss for the year
ended March 31, 2018 have increased by 13,226 million
yen (119,153 thousand U.S. dollars).
The amount of contract assets increased by 105,163
million yen (947,414 thousand U.S. dollars) and 118,389
(1) Reclassification
The main elements of reclassification are as follows:
million yen (1,066,568 thousand U.S. dollars) as of the
date of transition to IFRS and as of March 31, 2018 ,
a. In accordance with the presentation provisions under
respectively, and inventories decreased by the same
IFRS, financial income and financial expenses are
amount. Part of the contract assets were offset against
presented separately.
contract liabilities.
b. Research and development expenses are included and
presented in selling, general and administrative
expenses.
b. Equity instruments
Non-marketable equity instruments are recognized at
c. Part of other income and other expenses is included and
their cost under U.S. GAAP. If fair value of financial assets
presented in operating profit.
has decreased and the decrease is considered not to be
d. Deferred income taxes are included and presented in
temporary, impairment losses are recognized for the
income tax expenses.
amount of the cost of the financial assets in excess of fair
e. Other comprehensive income related to unrealized gains
value. Gains or losses on the sale of these financial assets
(losses) on securities, pension liability adjustments,
foreign currency translation adjustments and unrealized
are recognized in profit or loss.
Under IFRS, equity instruments are recognized at fair
gains (losses) on derivative instruments attributable to
value irrespective of whether there is an active market.
equity method investees are reclassified to share of
Because it is permitted to recognize changes in fair value
other comprehensive income of investments accounted
in other comprehensive income, the Company and its
for using the equity method.
(2) Reconciliation and measurement differences
The main elements of recognition and measurement
differences are as follows:
consolidated subsidiaries have elected to recognize
changes in fair value of equity instruments in other
comprehensive income. Accordingly, impairment losses
and gains or losses on the sale of equity instruments
recognized in profit or loss under U.S. GAAP are
a. Reconciliation of revenue and cost of sales
Under U.S. GAAP, if progress of construction contracts
recognized in other comprehensive income as well.
Consequently, other income of 23,637 million yen
cannot be reliably estimated, all construction costs and
(212,946 thousand U.S. dollars)under U.S. GAAP in the
construction revenue are recognized when the construction
Consolidated Statement of Profit or Loss for the year
is complete.
Under IFRS, revenue from a performance obligation
ended March 31, 2018 was recognized as changes in fair
value of financial assets measured at fair value through
satisfied over time is only recognized for costs incurred to
other comprehensive income and not recognized in profit
the extent that it is probable that the cost will be recovered
or loss under IFRS.
and costs are recognized as expenses in the period in
which they are incurred if the progress cannot be reliably
estimated.
Notes to reconciliation of cash flows
There are no significant differences in the statement of
cash flows resulting from the transition from U.S. GAAP to
IFRS.
124
First-time adoption
Notes to Consolidated Financial StatementsMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 35．Approval of the consolidated financial statements
The consolidated financial statements were approved by Takeshi Sugiyama, President & CEO, on June 27, 2019.
Approval of the consolidated financial statements
125
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 126
Independent Auditors’ Report
Independent Auditors’ ReportMITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019 Corporate Data / Shareholder Information (As of March 31, 2019)
Corporate Data
Mitsubishi Electric Corporation
Tokyo Building, 2-7-3, Marunouchi,
Chiyoda-ku, Tokyo 100-8310, Japan
Tel: +81(3)3218-2111
Established: January 15, 1921
Paid-in Capital: ¥175,820 million
Shares issued: 2,147,201,551 shares
Employees: 145,817
Major Shareholders
The Master Trust Bank of Japan, Ltd. (Trust Account)
SSBTC CLIENT OMNIBUS ACCOUNT
Japan Trustee Services Bank, Ltd. (Trust Account)
Meiji Yasuda Life Insurance Company
Nippon Life Insurance Company
Mitsubishi Electric Group Employees Shareholding Union
Japan Trustee Services Bank, Ltd. (Trust Account 5)
Japan Trustee Services Bank, Ltd. (Trust Account 7)
Japan Trustee Services Bank, Ltd. (Trust Account 4)
JP MORGAN CHASE BANK 385632
Note: Shareholder ratio calculations deduct 425,622 company-owned shares.
Distribution of Shareholders
Individual et al.
13.1%
Shareholders’ Meeting
The annual meeting of shareholders of the Corporation is regularly held in June
each year. Additionally, special shareholders meetings may be held as necessary.
Stock Exchange Listings
Japan: Tokyo
Europe: London
Number of Shares
(thousands)
Percentage of
Ownership
162,251
124,997
106,568
81,862
61,639
42,038
39,241
38,720
35,583
32,653
7.6%
5.8%
5.0%
3.8%
2.9%
2.0%
1.8%
1.8%
1.7%
1.5%
Foreign Corporations et al. 38.0%
Financial Institutions 40.8%
Other Corporations
5.8%
Traders of
Financial Instruments 2.3%
Stock Price (Yen)
2,500
2,000
1,500
1,000
500
Mitsubishi Electric’s Stock Price
Nikkei Stock Average
0
‘16/4
‘17/4
‘18/4
The Nikkei Stock Average is based on information copyrighted by Nihon Keizai Shimbun, Inc.
25,000
20,000
15,000
10,000
‘19/4
Nikkei Stock Average
(Yen)
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2019
127
Please address inquiries for further information to:
Mitsubishi Electric Corporation, Corporate Finance Div.
Tokyo Building, 2-7-3, Marunouchi, Chiyoda-ku, Tokyo 100-8310, Japan
Phone: 81-3-3218-2391
X-X01-9-CA400-C HQ1910〈IP〉