Implementing Balanced Corporate Management
"Changes for the Better," our corporate statement, encapsulates all that we stand for and aspire to—a brighter future for society, industry and everyday life through innovation.
Supporting this commitment to innovation and sustainable operations is a solid management structure backed by balanced management initiatives that stem from three key viewpoints: Growth; Profitability and Efficiency; and Soundness.
At the same time, we actively promote corporate social responsibility (CSR) initiatives based on our Corporate Mission and Seven Guiding Principles. A key priority is ethical and legal compliance through strengthening internal controls to ensure J-SOX compliance, and other educational measures implemented across the entire consolidated group of Mitsubishi Electric companies. In addition, we work diligently to protect the environment. Among a host of initiatives, we strive to reduce the level of CO2 emissions and foster a recycling-based society as part of our Environmental Vision 2021 program.
To ensure that we continue to meet the expectations of shareholders, we have undertaken reforms that are guiding our ongoing evolution into a network of highly competitive, electric-electronic businesses while leveraging synergies to further enhance corporate value.
Overcoming a Severe Operating Environment
In fiscal 2009, the Mitsubishi Electric Group recorded an operating income ratio of 3.8%, a return on equity (ROE) of 1.3% and a ratio of interest-bearing debt to total assets of 20.3%. These results reflect the harsh operating conditions that persisted throughout the period, particularly the sharp economic downturn in Japan and overseas from the second half of the fiscal year under review.
Anticipating that this difficult business environment will continue into the future, and guided by our overarching Balanced Corporate Management Policy, we will step up established efforts to further strengthen our operational structure. Placing particular emphasis on initiatives that address changes in operating conditions, we will reinforce fixed-cost reduction measures and various efforts to curtail costs with the aim of promptly realizing performance improvement.
| Operating income ratio: | 5% or more |
| ROE: | 10% or more |
| Interest-bearing debt to total assets: | 15% or less |
Framework for Balanced Corporate Management
The Group's balanced management initiatives focus on two frameworks. One is the Front-line Priority framework, through which the Group works to bolster its "craftsmanship" in the areas of quality, costs, manufacturing technologies, research and development, and intellectual property (IP) while enhancing competitiveness in marketing and services. The other is the Strong Synergistic Corporate Network framework, which entails the strengthening of production and sales links and the improvement of synergies between business segments. These activities extend to the fortification of Group-wide support functions and promotion of global management through collaboration between parent factories in Japan and facilities overseas, as well as through linkage between regional strategies and business and product-line strategies. As integral elements of our management framework, these two initiatives facilitate the implementation of balanced management focused on growth strategies, strengthening management resources and improving our financial standing.
Growth Strategies
We pursue a variety of growth strategies, including the following: the VI Strategy, which aims to make strong businesses stronger; the AD Strategy, which is designed to reinforce solutions centered on strong businesses; and the Global Strategy.
With a wide range of products and businesses that are both competitive and enjoying growth in markets worldwide, the Mitsubishi Electric Group is pressing ahead with these strategies as it strives for further global success.
VI Strategy
The core theme of the VI Strategy is to make strong businesses stronger.
Examples by segment of the Mitsubishi Electric Group's strong businesses include: power systems, elevators and escalators, and transportation systems in the Energy and Electric Systems segment; factory automation products and automotive electric and electronic products in the Industrial Automation Systems segment; satellites, optical broadband access systems and network security systems in the Information and Communication Systems segment; power devices in the Electronic Devices segment; and air conditioning and household equipment in the Home Appliances segment.
Under this strategy, we are fortifying strong businesses by devising growth strategies for individual business lines and bolstering support at the corporate level. In addition, by combining our diverse technologies and know-how, we are leveraging technological synergies to further reinforce these businesses.
AD Strategy
The AD Strategy aims to provide customer solutions centered on our strong businesses.
Focusing our efforts on competitive products and services, we bring together and apply our broad-ranging technologies and know-how to develop solutions businesses through product synergies. As a result, we are able to provide integrated, one-stop solutions that fulfill customer needs in such areas as global warming prevention, total security, AdvanCity™ (public space improvement platform) and imaging.
Global Strategy
The core theme of the Global Strategy—expanding and leveraging business opportunities on the global front—is key to the future growth of the Mitsubishi Electric Group.
Focusing on the above theme, the Group is promoting stronger relationships between manufacturing, sales and other functions of global businesses in fields such as energy and electric systems, photovoltaic power generation systems, transportation systems, air conditioning systems, elevators and escalators, factory automation equipment and automotive products.
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Environmental Management and Environment-related Business Strategies
Under Environmental Vision 2021, a long-range vision for environmental management formulated in October 2007, the Mitsubishi Electric Group strives to realize a sustainable society by making positive contributions to the earth and its people through technology and action. As initiatives to curtail CO2 emissions, we are working to reduce CO2 emissions resulting from product use by 30% compared with fiscal 2001 levels, from production by 520,000 tons, or 30% compared with fiscal 1991 levels, and from power generation. With the overarching objective to promote a recycling-based society, we are also implementing measures consistent with the 3Rs (reduce, reuse, recycle) product principle while targeting zero emissions in our manufacturing processes and the elimination of direct landfill waste. As we work to ensure harmony with nature and to foster environmental awareness, we will implement initiatives that develop personnel who think, feel and act for the environment.
The Mitsubishi Electric Group is active across a wide spectrum of environment-related fields. In its efforts to curtail CO2 emissions and realize a recycling-based society, the Group delivers a host of energy-saving products and services, such as photovoltaic power generation systems, power devices, high-efficiency automotive equipment, energy-saving countermeasure and support equipment, energy-related building equipment and high-efficiency lighting, while promoting heat pump applications, home appliance recycling and clean energy.
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Strengthening Management
The Mitsubishi Electric Group consistently promotes company-wide operational improvement measures, taking active steps to further solidify its operational structure.
To this end, we constantly strive to reinforce the "craftsmanship" that is integral to our foundations as a manufacturer. For example, we are always looking to enhance productivity and quality, to strengthen the development of strategic IP activities by promoting the development of key components and related initiatives and to improve material procurement by bolstering value analysis (VA) and other activities. Focusing on certain keywords, including the environment, energy efficiency, safety, security and social infrastructure development, we are pursuing business opportunities in newly emerging markets like India, Vietnam, Central and Eastern Europe and Russia. Underpinned by the aim to make strong businesses stronger, we are working to improve our financial standing through measures that include inventory reduction, and striving to effectively allocate human resources.
The Mitsubishi Electric Group will continuously and resolutely promote these initiatives and make every effort to strengthen quality, costs, production technology capabilities, development capabilities, IP activities, and sales and services, with the goal of further boosting profitability.
Improving Financial Standing
As of March 31, 2009, total interest-bearing debt including bonds stood at ¥677.9 billion for a ratio of interest-bearing debt to total assets of 20.3%.
The Mitsubishi Electric Group is implementing comprehensive structural reforms to increase the competitiveness and earnings of all Group businesses. To raise overall profitability, we are striving to boost competitiveness in the areas of quality, costs, production technology capabilities, development capabilities, IP, marketing and services. In addition, we are streamlining inventories, primarily through "just in time" activities, and expanding our global cash management system in order to improve asset turnover and the efficiency of funding operations. These initiatives are aimed at generating stable cash flow.
Taking a balanced approach to the use of cash, we are working to reduce interest-bearing debt, provide returns to shareholders through dividends and invest in growth areas.
Striving for Constant Improvement
Based on its Balanced Corporate Management Policy, the Mitsubishi Electric Group is steadily implementing the aforementioned management strategies designed to enhance the formidable competitiveness of its individual businesses. At the same time, we continue to implement reforms intended to guide our ongoing evolution into a network of highly competitive, electric-electronic businesses while leveraging synergies to further increase corporate value and ensure sustainable growth.
To accomplish these goals, it is increasingly important that we strive for constant improvement, which puts into practice the spirit that is embodied in our corporate statement, "Changes for the Better." The Mitsubishi Electric Group will continually seek to improve, pressing ahead with sincerity and a confidence that its efforts will yield greater corporate value.
