Mitsubishi Electric Reports Consolidated Half-Year Results for the Period of April 1-September 30, 1997

Tokyo, November 27, 1997 -- Mitsubishi Electric Corporation today announced its consolidated financial results for the half-year ended September 30, 1997.

During the half-year period (April 1-September 30, 1997), Mitsubishi Electric saw a year on year increase of 7% in net sales to 1.83 trillion yen. This figure marks four consecutive years of increases on a first term half-year basis, and is a new record high for the Company. However, although sales continued to register strong growth, profits were hard hit by falling prices and increased competition in the fields of semiconductors, household appliances and audio-visual equipment. Income before income taxes came to a loss of 13.7 billion yen (compared with a 27.0 billion yen gain for the same period last year), while net income amounted to a 26.1 billion yen loss (against a 6.3 billion yen gain for the same period last year).

For the remainder of the fiscal year, Mitsubishi Electric will work to improve its business performance by moving forward with a series of reform measures intended to accomplish three important goals: The promotion of management which emphasizes operational efficiency, the expansion of sales and orders through the introduction of new product lines, and the strengthening of product cost competitiveness.

Background

In the first half of the present fiscal year, the Japanese economy, which had showed signs of a moderate recovery, shifted abruptly towards a general stagnation marked by a decline in personal consumption, especially of durable goods, caused in part by the April rise in the national consumption tax, and a dramatic drop in new housing investment, factors which point to a pervading sense of uncertainty concerning the future direction of the economy as a whole. In the international economy, although many Asian countries have downshifted to lower rates of growth due to the recent financial crisis in the region, the US and European economies have continued to perform well and have managed to preserve an overall bullish tone for the world market as a whole.

In response to the above economic conditions, while working to expand further business promotion operations capable of responding rapidly to changes in market structures and the business environment, Mitsubishi Electric Corporation also focused its efforts on raising the sales capabilities and long-term profitability of the corporate group as a whole.

Results by Business Segment

Heavy Machinery saw an increase in overseas sales of electric power equipment, but faced a severe market environment overall. In particular, exports of elevators and escalators to China experienced a decline. In addition, as expected, last year's strong sales of electrical equipment for steel plants served to dampen sales performance in this product category for the most recent period due to the time delay between the sale and the delivery of these kinds of orders. The segment as a whole recorded a slight decline in total sales.

Industrial Products and Automation Equipment increased both sales and orders on a year on year basis. Although sales of equipment such as transformers and circuit breakers were adversely affected by declines in public works spending and falling demand for new building construction, sales of factory automation equipment such as programmable controllers, inverters, and servos were strong, and sales of industrial mechatronics equipment such as numerical controllers and electrical-discharge machines were supported by strong capital investment in the auto industry.

Information, Telecommunications and Electronic Systems and Devices registered a healthy increase in sales on a year on year basis. 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 peripheral devices such as display monitors also expanded on continued growth in the personal computer sector. The telecommunications business also shifted into high gear behind strong sales of mobile communications devices, especially cellular phones. In the semiconductor division, sales increased in both domestic and overseas markets due mainly to continued strong demand for memory products.

Consumer products operations recorded a decline in sales due in part to weak demand and falling prices in the audio-visual equipment sector. Another factor was the dampening effect on domestic sales of home appliances such as air conditioners caused by unseasonable weather in Japan during the summer.

Annual 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 labored tempo of the recovery of the Japanese economy, the continuing downward trend in world semiconductor prices, the lack of the emergence of a strong upward trend in capital investment within the manufacturing sector, and the escalating crisis of confidence gripping much of Asia.

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

Net sales: 4 trillion yen (7% increase on a year on year basis)

Income Before Income Taxes: 35 billion yen (48% decrease on a year on year basis)

Net income: 10 billion yen loss

(in billions of yen)

	(A) Apr. - Sept. 1997	(B) Apr. - Sept. 1996	(A)/(B) (%)	Fiscal 1997 (Apr. 1996 - Mar. 1997)
Net Sales	1,829.3	1,702.9	107	3,725.1
Income before Income Taxes	-13.7	27.0	n/a	67.9
Net Income	-26.1	6.3	n/a	8.5
Net Income per Share	-12.19 yen	3.07 yen	n/a	3.97 yen

(in billions of yen)

Product Segment	(A) Apr. - Sept. 1997	% of total	(B) Apr. - Sept. 1996	% of total	(A)/(B) (%)
Heavy Machinery	389.5	20	389.8	21	100
Industrial Products and Automation Equipment	327.9	17	302.1	17	109
Information, Telecommunication and Electronic Systems and Devices	704.9	36	581.7	32	121
Consumer and Other Products	526.5	27	540.7	30	97
Subtotal	1,949.0	100	1,814.4	100	107
Intersegment Sales	(119.6)	n/a	(111.5)	n/a	n/a
Total Net Sales	1,829.3	n/a	1,702.9	n/a	107
of Which Overseas Sales	502.4	27	449.8	26	112