Mitsubishi Electric Reports Non-consolidated Half-Year Results for the period of April 1-September 30, 1997

Tokyo, October 28, 1997 -- Mitsubishi Electric Corporation today announced its non-consolidated financial results for the half-year ended September 30, 1997.

During the half-year period (April 1-September 30, 1997), Mitsubishi Electric saw year on year increases of 6% in net sales to 1.35 trillion yen and 5% in orders received to 1.43 trillion yen. These figures mark four consecutive years of increases on a first term half-year basis, and both are new record highs for the company. However, due to the effects of falling prices and increased competition in the fields of semiconductors, household appliances and heavy electrical equipment, ordinary profit fell to 5 billion yen, a 79% decrease compared with the previous year's figure, while net income also saw a large decline to 3.6 billion yen, a 77% drop from last year's posting.

The company is now in the process of preparing measures to address problem areas and strengthen the competitiveness of operations which are experiencing severe business environments.

Mitsubishi Electric regrets to inform shareholders that the board of directors has determined the dividend per share for the period will be 4 yen, a decrease of 1 yen per share compared with last year's dividend for the same period.

Background

In the first half of the present fiscal year, the Japanese economy showed signs of stagnation which included the decline in personal consumption, especially of durable goods, that accompanied the April rise in the national consumption tax, a dramatic decrease in demand for housing starts, declines in public works spending, and bearish trends in capital investment. The picture in overseas markets was dominated by two trends: the widening uncertainty about the future of the Asian economy, particularly with regard to the prospects of ASEAN countries, and the strength of exports which have benefited from good economic conditions prevailing in the United States and Europe as well as from the recent weakness of the yen versus Western currencies.

In response to the above economic conditions, while working to increase orders and develop new products, Mitsubishi Electric Corporation has focused its efforts on expanding operations and improving its business performance by promoting operational efficiency in all business activities. Along with its efforts to increase sales in its information technology and factory automation sectors, the company also conducted a review of the production system of its audio visual business division. The audio visual group, which is operating in an industry experiencing very severe economic conditions, plans to centralize production facilities to increase cost efficiency. The company also moved to stabilize its semiconductor operation by expanding its sales network and increasing its non-DRAM related business. In addition, in order to strengthen the company's new business development capabilities, structural reforms have been carried out on a company wide basis. For example, the company has established new operations dedicated specifically to the development of new business areas. These new operations include the Digital Broadcasting Business Group, which was established in June to coordinate Mitsubishi Electric's efforts in the promising digital broadcasting field.

Results by Business Segment

Heavy Machinery saw decreases in both sales and orders on a year on year basis. Sales declined 8% to 278 billion yen while orders fell 6% to 326 billion yen. Both the domestic and overseas market environments in this sector have taken a turn for the worse due to increased competition and investment restraint among power companies with regard to power supply equipment and electrical transmission substations. As for sales to manufacturers, due to efforts to expand product offerings targeting the total engineering sector and steel production facilities, orders increased slightly; however, as it was an off year for large orders, net sales registered a decline.

Although orders for electrical equipment for trains saw a decline attributable to decreased demand from the public transportation sector, net sales increased slightly due to strong sales of bullet train related electronics to Japan Railways. On a fall in exports to China, the building systems operations recorded sales and orders that were below the previous year's levels for the same period.

Industrial Products and Automation Equipment increased both sales and orders on a year on year basis. Sales climbed 8% to 276.3 billion yen while orders were up 11% to 279.6 billion yen. Although sales of factory automation equipment such as programmable controllers, inverters, and servos were supported by strong demand from manufacturers of automobiles, liquid crystal, semiconductors and food products and, as a result, improved on last year's performance, sales of power distribution systems such as transformers and circuit breakers were adversely affected by declines in public works spending and falling demand for new building construction and experienced a year-on-year decline for the period.

Industrial mechatronics equipment sales were aided by continuing capital investment in the auto industry. Sales of numerical controllers, electrical discharge machines and robotics, among others, showed steady growth during the period.

Supported both by a surge in the domestic car electronics industry and by strong exports of car audio equipment, auto parts sales also increased on a year on year basis.

Information, Telecommunications and Electronic Systems and Devices registered healthy increases in both sales and orders on a year on year basis. Sales climbed 25% to 608.8 billion yen while orders increased by 21% to 638.4 billion yen. In the company's information technology operations, the computer division saw increased sales of servers and mobile computing devices due to strong demand from corporate clients installing company intranets. Sales of display monitors also expanded due to continued growth in the personal computer sector.

Mitsubishi Electric's telecommunications business shifted into high gear behind strong sales of mobile communications devices, especially cellular phones, registered a solid 18% year on year gain.

In the semiconductor division, although little progress was made in the latter part of the half-year period due to production curtailments in the audio visual equipment industry, poor sales of air conditioners and further declines in DRAM prices, sales increased in both domestic and overseas markets thanks to continued strong demand for telecommunications equipment.

With the shrinking of the Japanese defense budget, orders to Mitsubishi Electric's defense contracting operations declined. However, as the strong level of orders received over the previous two fiscal years is reflected in the sales calculations for the measured period, sales posted a year on year increase. The company's space technologies operations, which generally see large orders concentrated in the second half of the fiscal year, posted a decline in orders received for the period. Net sales, however, increased over last year's levels on strong sales of commercial and government use satellites.

Consumer products operations saw decreases in both sales and orders on a year on year basis. Sales declined 19% to 188.2 billion yen while orders fell 21% to 185.3 billion yen. Sales of the company's consumer products were held back by the thrifty mood prevailing among Japanese consumers as a reaction to the purchasing rush that occurred in the lead up to the rise in the national consumption tax on April 1^st. Another factor was the dampening effect on domestic air conditioner sales caused by unseasonable weather in Japan during the summer. Sales of ventilation fans for the home were also affected by the general decline in demand for new housing construction and were flat for the period.

The audio visual equipment business faced a severe environment plagued by continuing price deflation and the damaging effects of the consumption tax increase. The sector accordingly registered a year on year decrease in net sales.

Exports of consumer products continued their long term decline as the company further expanded its overseas production.

Annual Non-consolidated Forecast for Fiscal 1998 (April 1, 1997-March 31, 1998)

The company believes that the severe economic conditions facing many of its operations at the present time will continue over the next half-year period. Key factors supporting this view include the lax tempo of the recovery of the Japanese economy, the continuing downward trend in the world DRAM market, and the lack of the emergence of a strong upward trend in capital investment among the manufacturing sector. However, Mitsubishi Electric will work towards the further expansion of its businesses by continuing to look for ways to improve operational efficiency, speeding up the development of new operations, and, most importantly, concentrating its energies on improving the company's overall business performance.

The company forecasts the following business results for its non-consolidated operations in the fiscal year ending March 31, 1998:

Orders received: 3.03 trillion yen (6% increase on a year on year basis)

Net sales: 3.00 trillion yen (5% increase on a year on year basis)

Ordinary profit: 45 billion yen (26% decrease on a year on year basis)

Net income: 10 billion yen (61% decrease on a year on year basis)

(in billions of yen)

	(A) Apr. - Sept. 1997	(B) Apr. - Sept. 1996	(A)/(B) (%)	Fiscal 1997 (Apr. 1996 - Mar. 1997)
Net Sales	1,351.5	1,277.2	106	2,845.0
Ordinary Profits	5.0	24.0	21	61.1
Net Income	3.6	16.3	23	25.8
Dividend per Share	4 yen	5 yen	n/a	10 yen
Net Income per Share	1.71 yen	7.61 yen	n/a	12.03 yen
Orders Received	1,429.5	1,359.2	105	2,865.1