The business environment in fiscal year 2009 saw an economic slowdown in the first half of the fiscal year, and with the financial crisis adversely and widely affecting the economy, the economic downturn became extremely severe in the second half. With the financial uncertainty becoming increasing mainly in Europe and the US, the yen rapidly became stronger against major currencies.

In order to respond to these changes, especially in the management environment, the Mitsubishi Electric Group has been involved in reducing fixed cost and implementing further cost reduction activities, etc. to keep and improve its business performance. The company has also continued its efforts to strengthen its business structure through Group-wide management improvement programs, growth strategies and structural reforms.

The social infrastructure systems business saw increases in orders from the previous fiscal year due to expansions both domestic and overseas in electric equipment for rolling stock, power generation business and transmission/distribution related business, while sales decreased from the previous fiscal year due to a decrease in public-works business in Japan.

The building systems business experienced decreases in both orders and sales from the previous fiscal year, due to decreases in global demand for elevators and escalators, as well as postponements in large projects, etc.

As a result, total sales for this segment decreased 1% from the previous fiscal year, while operating income increased from the previous fiscal year due to increased sales in the power generation-related business, etc.

The factory automation systems business saw decreases in both orders and sales from the previous fiscal year due to decreases in demand, from the second quarter of fiscal 2009, for industrial machinery in the global market, flat panel display related investments in Korea and Taiwan, as well as domestic surface mounting systems related investments.

The automotive equipment business saw decreases in both orders and sales from the previous fiscal year due to a drastic decrease in global demand starting in September, despite increases, up to the second quarter of fiscal 2009, upheld by Japanese multinational automotive manufacturers.

As a result, total sales for this segment decreased by 16% from the previous fiscal year. Operating income decreased from the previous fiscal year due to decreases in sales, etc.

The telecommunications equipment business saw decreases in both orders and sales from the previous fiscal year due to the termination of the mobile handset business, despite increased orders and sales in the communications infrastructure systems business.

The information systems and services business saw an increase in sales from the previous fiscal year due to growth in our system integration business and operation services business, etc.

The electronic systems business saw increases in both orders and sales from the previous fiscal year due to received orders for the ST-2 commercial communications satellite, etc.

As a result, total sales for this segment decreased 10% from the previous fiscal year. Operating income increased from the previous fiscal year, owing to the termination of our mobile handset business, etc.

The semiconductors business saw decreases in both orders and sales from the previous fiscal year due to decreases in industrial power modules, laser diodes for DVD recorders and power amplifiers for domestic mobile handsets, etc.

Sales in the liquid crystal business was unchanged from the previous fiscal year due to an increase in products for consumer use, despite a great decrease in products for industrial use.

As a result, total sales for the segment decreased 13% from the previous fiscal year. Operating income became worse compared to the previous fiscal year due to decreases in sales and recognition of loss on impairment of long-lived assets, etc.

Sales decreased 10% from the previous fiscal year mainly in our affiliated companies involved in materials procurement and logistics, etc.

Operating income decreased from the previous fiscal year due to decreases in sales, etc.

The company’s total assets for the fiscal year decreased from the end of the previous fiscal year by JPY150.9 billion to JPY3,334.1 billion. This decrease is mainly due to a JPY136.1 billion decrease in trade receivables in response to decreased orders and sales.

The balance of outstanding debts and corporate bonds rose by JPY127.0 billion from the balance as of the end of the previous fiscal year to JPY677.8 billion, resulting in a rise of its ratio against total assets up to 20.3% (an increase of 4.5 points compared to the end of the previous fiscal year). Trade payables decreased by JPY145.4 billion, while reserves for retirement and severance benefits increased by JPY119.2 billion due to falling stock prices, etc. leading to increased amount of shortage in pension reserves, etc.

Shareholders’ equity decreased by JPY181.9 billion compared to the previous fiscal year to JPY849.4 billion. The ratio of shareholders’ equity to total assets was 25.5%, a 4.1-point decrease compared to the previous fiscal year.

Accumulated other comprehensive income decreased by JPY166.0 billion due to a decline in stock prices, etc. Retained earnings decreased by JPY15.7 billion owing to a JPY12.1 billion net income and a dividend payment of JPY27.9 billion.

The world economy is expected to experience a continued environment of extreme severity in the first half of fiscal 2010 mainly in Europe and the United States, due to the credit crunch and worse employment environment. The Japanese economy is also expected to show further weakening in commercial demands. While the economy in the second half of the fiscal year is expected to bottom owing to stimulus packages by governments as well as inventory adjustments, the buoyancy will be limited and the annual economic growth of major industrial countries are all expected to fall back. Also arising from stronger yen and growing severity in the credit crunch, etc., increased risk of a continuous economic downturn does not allow us to be optimistic about our management environments. Under these circumstances, Mitsubishi Electric forecasts a decrease in net sales and income for fiscal 2010.

In the meantime, the Mitsubishi Electric Group will continue to increase and strengthen profitability in each business segment. In addition, to respond to the changes in the management environment, we are committed to rapidly implementing various company-wide measures toward improving business performance and financial standing. We will also realize sustainable growth by steadfast growth strategies to uplift our business performance at an early stage.