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 emphasize 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 internal controls training and other measures implemented across the entire consolidated group of Mitsubishi Electric companies. We also work diligently to protect the environment. Among a host of initiatives, we strive to prevent global warming 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.
Improving Performance through Balanced Corporate Management
In fiscal 2008, the Mitsubishi Electric Group attained certain management targets set under its Balanced Corporate Management policy. Specifically, we recorded an operating income ratio of 6.6%, return on equity (ROE) of 15.1% and a ratio of interest-bearing debt to total assets of 15.8%. The Group's success in achieving these targets can be attributed to initiatives directed toward improving overall performance.
Going forward, the Mitsubishi Electric Group will endeavor to consistently meet all management targets and to promptly achieve its objective for interest-bearing debt to total assets.
| Operating income ratio: | 5% or more |
| ROE: | 10% or more |
| Interest-bearing debt to total assets: | 15% or less* |
* As of April 2007, the then-valid target of 20% or less was replaced with a tighter and lower target of 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 properties (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.
Strengthening Management
The Mitsubishi Electric Group consistently promotes companywide management improvement measures, taking active steps to further solidify its management 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, promote the development of key components, strengthen development of strategic intellectual property (IP) activities and improve material procurement by bolstering countermeasures to offset rising material costs. Moreover, we encourage collaboration among business divisions to improve marketing and service efficiency in countries and regions that exhibit potential for growth. Based on certain keywords including the environment, energy efficiency, safety and security, 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 promote these initiatives and make every effort to strengthen quality, costs, production technology capabilities, development capabilities, IP activities, and marketing and services, with the goal of further boosting profitability.
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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.
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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 help prevent global warming, 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 help prevent global warming, the Group delivers a host of energy-saving products and services such as solar power generation systems, power devices, high-efficiency automotive equipment, energy-saving countermeasure and support equipment, energy-related building equipment, high-efficiency lighting, heat pump applications and clean energy.
Improving Financial Standing
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, intellectual property, 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 consistently high levels of 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. In comparison with a peak interest-bearing debt of ¥1,769.4 billion as of March 31, 1998, interest-bearing debt as of March 31, 2008 was reduced to ¥550.7 billion. This represents an improvement in the ratio of interest-bearing debt to total assets from 40.6% down to 15.8%. We also increased annual dividends from ¥3 for the fiscal year ended March 31, 2003 to ¥13 for the fiscal year ended March 31, 2008.
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.
