Tokyo, May 28, 1998 -- Mitsubishi Electric Corporation today announced its financial results for the fiscal year ended March 31, 1998.

CONSOLIDATED RESULTS

On a consolidated basis, the company saw a year on year increase of 2% in net sales to 3.80 trillion yen. This marks a fourth consecutive year on year rise. However, due to falling prices in many important product categories, including audio visual equipment, and costs associated with the restructuring of overseas affiliates, income before income taxes came to a loss of 52.5 billion yen, while net income amounted to a loss of 105.9 billion yen.

Results by Business Segments

In the Heavy Machinery group, equipment related to power generation experienced a severe year due to restraint in domestic investment and the fact that last year's strong sales of electrical equipment to manufacturers served to dampen sales during the period under review. Building equipment including elevators showed a slight increase from a year earlier mainly due to steady growth in maintenance services.

In the Industrial Products and Automation Equipment group, sales increased on a year on year basis. Sales of factory automation equipment, such as programmable controllers and inverters used for automobile manufacturing, increased and exports grew steadily.

In the Information, Telecommunications and Electronic Systems & Devices group, sales also increased from the previous year. Sales of micro-controllers and application specific integrated circuits (ASICs) expanded as did sales of both desktop and mobile personal computers. Defense systems and space equipment also increased sales in the fulfillment of several large orders.

In the Consumer and Other Products group, sales declined from a year earlier. This was attributable mainly to sluggish demand and falling prices in the audio visual equipment in addition to a decrease in demand for air conditioners caused by the unusually cool summer in Japan.

In view of these results, it is the position of Mitsubishi Electric's management that swift reforms dedicated to improving the competitiveness of each business unit are of the utmost urgency. In addition to measures to strengthen businesses which are currently healthy, such as factory automation and elevators, structural reforms are being implemented in sectors which are currently operating at a loss, such as semiconductors and audio visual equipment.

DIVIDEND INFORMATION

Mitsubishi Electric's management plans to pass over the second installment of its biannual dividend payment for the fiscal year ended March 31^st, 1998. The matter will be referred to the general meeting of stockholders to be held on June 26, 1998. (Note: The interim dividend per share was 4 yen.)

BACKGROUND

In fiscal 1998, Japan's economy stagnated due to a drop in personal consumption caused by the raising of the consumption tax and the abolishment of special tax cuts. In addition to a significant decline in housing demand, companies showed a reluctance to invest during the latter half of the fiscal year due to concerns over the financial system and a drop in stock prices. In other markets, the U.S. economy continued to show strength, while many European countries also showed healthy growth. In Asian countries that had previously been enjoying rapid growth, the currency crisis slammed the brakes on growth and continues to cause problems for business active in this important market.

In this mixed economic environment, while working to develop new exciting products and increase orders, Mitsubishi Electric has striven to improve its financial results and expand operations by improving management efficiency and reforming its business structure. However, the company was not able to respond fast enough to changes in the market environment and the challenges of intensifying price competition. In particular, the collapse of memory chip prices, continued fierce price competition in audio visual products and weakened demand for air conditioners in Japan dealt serious blows to the financial performance of the company.

NON-CONSOLIDATED RESULTS

The company saw orders received decrease to 2.79 trillion yen for the period, down 3% from the previous year. Net sales also fell slightly on a year on year basis to 2.81 trillion yen, a 1% decline from last year's level. Ordinary profit dropped by 93% to 4.2 billion yen. Net income recorded a loss of 33.8 billion yen due in part to an extraordinary loss registered for restructuring costs for overseas affiliates.

The business performances of each product segment are as follows:

[Heavy Machinery]

Orders received: 658.3 billion yen (down 9%)

Sales: 636.8 billion yen (down 11%)

While overseas business for power machinery expanded steadily, domestic business declined both in orders received and sales. This was mainly attributable to restrained facility investment. Electrical equipment for manufacturers maintained its previous year's order level although sales decreased.

Railway equipment showed growth in orders both in the domestic and overseas markets. Sales, however, decreased due to a fall in the number of large scale projects. The public-facility equipment field increased its business for systems designed to protect against disasters, but saw a decrease in sales of water processing plants. While orders for public-facility equipment shrank, sales stayed at almost the same level as last year. In the building services field, both orders and sales showed poor performance due to a decrease in demand for elevators and escalators caused by sluggishness in the economies of China and Southeast Asia.

[Industrial Products and Automation Equipment]

Orders received: 553.1 billion yen (up 5%)

Sales: 557.5 billion yen (up 4%)

In industrial equipment, factory automation equipment including inverters, programmable controllers and servo motors saw increased sales due to steady demand in the domestic market and enlarged demand in the U.S. and the European markets. Rotors and distributing and controlling equipment, on the other hand, faced weak demand over the period.

The mechatronics equipment business units registered smooth performance in numerical controllers and electrical-discharge machines due to expanded demand for machine tools for use in automobile manufacturing. Meanwhile, laser processing machine sales declined because of a sharp fall in demand in the domestic market in the latter half of the fiscal year.

Automobile equipment surpassed last year's sales record as domestic automobile production increased slightly and car navigation systems registered strong sales.

[Information, Telecommunications and Electronic Systems and Devices]

Orders received: 1.22 trillion yen (up 5%)

Sales: 1.27 trillion yen (up 10%)

Despite the drop in memory chip prices, the semiconductor sector increased in terms of both orders received and sales on a year on year basis due to the healthy growth of products like micro-controllers and ASICs and the successful introduction of new products such as embedded memory (eRAM).

Communication equipment posted favorable business results; servers and mobile computers, display monitors for personal computers, and wire communication equipment all increased sales on a year on year basis.

Although orders received for defense systems leveled off from the previous year, sales increased due to large sales related to a next generation air-to-air missile system. The space business increased both orders received and sales due to the large orders and sales of commercial and government ordered satellites.

[Consumer Products]

Orders received: 355.6 billion yen (down 21%)

Sales: 350.7 billion yen (down 21%)

Refrigerators decreased sales on a year on year basis due to lower personal consumption. Air conditioners experienced a slow down in both home and office use units due partly to the unusual cool summer. Housing equipment including ventilators decreased in sales because of a decline in housing construction.

In audio visual equipment, although wide screen color televisions saw increased sales, total domestic sales narrowed on a year on year basis due to lower demand and lower prices. Exports also declined as overseas production increased.

FORECASTS FOR NEXT FISCAL YEAR

The business environment facing the company over the next fiscal year is expected to remain severe. Key factors which will tend to act as a drag on profits and sales are stagnation in the standard use memory products market, the lack of a strong surge in capital investment by the manufacturing sector, and increased competitiveness in world markets.

Mitsubishi Electric is determined to enhance its business performance through improving management efficiency, restructuring under the policy of "selection and consolidation," improving its financial structure and establishing new businesses for the future.

Forecasted consolidated and non-consolidated results for fiscal 1999 are as follows:

[Consolidated] ('99/'98)

Net sales 3.95 trillion yen (up 4%)

Income before income taxes 30 billion yen (----)

Net income 20 billion yen (----)

[Non-consolidated]

Net sales 2.90 trillion yen (up 3%)

Ordinary profit 30 billion yen (up 610%)

Net income 20 billion yen (----)
 

(in billions of yen)

Product Segment	Fiscal 1998	% of total	Fiscal 1997	% of total	'98/'97 (%)
Heavy Machinery	871.2	22	905.5	23	96
Industrial Products and  Automation Equipment	647.2	16	621.3	16	104
Information,  Telecommunication and  Electronic Systems  and Devices	1,473.4	36	1,341.9	34	110
Consumer and Other  Products	1,046.2	26	1,090.3	27	96
Sub Total	4,038.1	100	3,959.1	100	102
Intersegment Sales	(236.8)	--	(233.9)	--	--
Total Net Sales	3,801.3	--	3,725.1	--	102
Overseas Sales Component	1,035.3	27	916.9	25	113

Fiscal 1998: April 1, 1997 - March 31, 1998