TOKYO, October 29, 1998 -- Mitsubishi Electric Corporation today announced its non-consolidated financial results for the half-year ended September 30, 1998.

Overview

During the half-year period (April 1-September 30, 1998), Mitsubishi Electric recorded net sales of 1.31 trillion yen, a 3% decrease on a year on year basis. Ordinary profit was 4.3 billion yen, a 13% decrease compared with the previous year's figure, while net income declined to 2.4 billion yen, a 33% drop from last year's posting. For the period, orders received shrank by 11% to 1.28 trillion yen.

The company will take a extraordinary loss of 18.0 billion yen in relation to restructuring of overseas operations. (Please note that proceeds from the sales of stocks and assets amounting to 16.1 billion yen will be registered as extraordinary profit on the corporate balance sheet.)

Background

In the first half of the fiscal year, the recession gripping the Japanese economy worsened as, in addition to further declines in personal consumption and continuing weak demand for new housing, instability in the financial sector and new lows in stock averages have led to bearish attitudes towards capital investment. In world markets, conditions began to take on the alarming aspect of a global recession as Russia and the Central/South American region joined Asia in economic crisis and even the United States' economy, which has continued to expand, began to show signs of slowing.

In response to the above economic conditions, while concentrating efforts on developing new products and increasing orders, Mitsubishi Electric Corporation has moved forward with its drive to increase operational efficiency, reform its business structure and improve long-term business performance. While accelerating on-going efforts to reform slumping sectors such as semiconductors and audio visual products, the company has restructured its operations with the aim of strengthening the foundation of its semiconductor operations, a strategic sector the company believes will support future growth areas such as information technology and digital home appliances.

Dividend

Mitsubishi Electric Corporation regrets to inform its shareholders that it will pass over the first installment of its biannual dividend payment for the fiscal year to end March 31, 1999. The company asks for the understanding of its shareholders as it works to strengthen its financial position and restructure its operations.

Results by Business Segment

Heavy Machinery saw an increase in sales, but orders lagged on a year on year basis. Sales increased 1% to 281.5 billion yen while orders fell 14% to 279.8 billion yen. Although the thermal and nuclear power generation sectors experienced a fall in orders due to restraint in capital investment and increased competition, sales rose for the period on strong exports of transformer equipment. Orders of electrical equipment for manufacturers, also affected by the general decline in capital investment activities, fell for the period, but sales beat last year's results thanks in part to large orders from industries such as steel manufacturing. Although orders for electrical equipment for trains increased on the strength of large orders from Japan Railways and private rail companies, sales for the period declined. Orders from public works projects declined while sales increased due to the fulfillment of several large orders, particularly equipment for water treatment plants. The company's building systems operations, facing falling demand in vertical transportation (elevators and escalators) both overseas and at home, registered a decline in both sales and orders.

Industrial Products and Automation Equipment registered decreases in both sales and orders on a year on year basis. Sales fell 4% to 266.6 billion yen while orders declined by 10% to 253.0 billion yen. Although exports of factory automation equipment such as programmable controllers, inverters, and servos made a strong showing during the period, sales of these products declined overall due to falling demand from domestic industries, such as semiconductors and automobiles, which restrained capital investment during the period. Motor and power distribution equipment were also adversely affected by a decline in capital investment in the manufacturing sector, particularly a fall in plant construction.

Although exports of electric discharge machines, laser processing machines, numerical controllers, and industrial robots bound for the US and European Union continued to show steady increases, the product were also affected by the decrease in capital expenditures among domestic industries such as automobiles, and electronics and sales for the period came in below those recorded for the same period last year.

Car audio and automotive electronics experienced increased sales to US car manufacturers; however, the large impact of the reduction in domestic automobile production caused sales for the product group to decline on a year on year basis.

Information, Telecommunications and Electronic Systems and Devices experienced a decline in both sales and orders on a year on year basis. Sales were off slightly by 4% to 583.3 billion yen while orders fell 11% to 566.7 billion yen. In the semiconductor group, although the company's System LSI (Large Scale Integration) operations, exemplified by its eRAM (embedded random access memory) products, expanded sales, the combination of falling DRAM (dynamic random access memory) prices and a decline in demand from the depressed consumer electronics industry caused sales for this group to decline slightly.

The computer division saw increased sales of servers and mobile computing devices; however, decreased information technology spending by corporate customers caused sales to fall on a year on year basis. Mitsubishi Electric's telecommunications business increased sales on strong performances in the cellular phone and fiber-optic communication equipment fields. With the shrinking of the Japanese defense budget, orders to Mitsubishi Electric's defense contracting operations declined. However, the strong level of orders received over the previous fiscal year, including business related to a guided missile system, pushed up sales for the sector on a year on year basis. Securing an order for Superbird 4, a commercial satellite, and shipping an engineering model of the DRTS (Data Relay Test Satellite) to NASDA were two of the major accomplishments that helped the company's space technologies operations increase both orders and sales for the period under review.

Consumer products operations saw decreases in both sales and orders on a year on year basis. Sales declined 7% to 174.5 billion yen while orders fell 5% to 176.6 billion yen. Although the company increased its share of the domestic air conditioning market, unseasonable weather again led to a decline in sales volumes. However, due to the strong sales of the company's new hit line of refrigerators, overall sales of home appliances increased. Sales of ventilation fans for the home fell as the number of new housing starts declined for the period. In addition, sales of package air conditioning equipment were adversely affected by the decline in construction of non-residential buildings. The company's audio visual equipment business increased sales with the launch of new television and video cassette recorder lines, but continued price declines coupled with falling parts exports brought on by falling overseas production levels caused sales to decrease on a year on year basis.

Annual Non-consolidated Forecast for Fiscal 1999 (April 1, 1998-March 31, 1999)

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 low levels of consumption demand, the growing restraint in capital and facilities investment, and the nascent state of financial sector reform efforts. In addition, instability in the currency and stock markets makes predicting future business conditions particularly difficult. However, Mitsubishi Electric is determined to take measures to increase operational efficiency and competitiveness, and, in doing so, will concentrate its energies on improving overall business performance.

The company forecasts the following business results for its non-consolidated operations in the fiscal year ending March 31, 1999:

Orders received: 2.75 trillion yen (1% decrease on a year on year basis)
Net sales: 2.80 trillion yen (no change on a year on year basis)
Ordinary profit: 30 billion yen (614% increase on a year on year basis)
Net income: 20 billion yen

(in billions of yen except where noted)

	(A) Apr. - Sept. 1998	(B) Apr. - Sept. 1997	(A)/(B) (%)	Fiscal 1998 (Apr. 1997 - Mar. 1998)
Net Sales	1,306.1	1,351.5	97	2,811.5
Ordinary Profits	4.3	5.0	87	4.2
Net Income	2.4	3.6	67	- 33.8
Dividend per Share	-	4 yen	n/a	4 yen
Net Income per Share	1.15 yen	1.71 yen	n/a	- 15.77 yen
Orders Received	1,276.2	1,429.5	89	2,790.6

(in billions of yen)

Product Segment	(A) Apr. - Sept. 1998	% of total	(B) Apr. - Sept. 1997	% of total	(A)/(B) (%)
Heavy Machinery	281.5	22	278.0	21	101
Industrial Products and Automation Equipment	266.6	20	276.3	20	96
Information, Telecommunication and Electronic Systems and Devices	583.3	45	608.8	45	96
Consumer Products	174.5	13	188.2	14	93
Total Net Sales	1,306.1	100	1,351.5	100	97
of Which Exports	343.2	26	320.7	24	107