No. 0486

October 28, 1999

FOR IMMEDIATE RELEASE
For more information:
Matthew Nicholson
PR Dept.
Mitsubishi Electric Corporation
03-3218-2346
Matthew.Nicholson@hq.melco.co.jp

Company Announces Increase in Ordinary Profits in First Half-Year Period for First Time in Four Years

TOKYO, October 28, 1999 -- Mitsubishi Electric Corporation today announced its non-consolidated financial results for the half-year ended September 30, 1999.

Overview

During the half-year period (April 1-September 30, 1999), Mitsubishi Electric recorded net sales of 1.19 trillion yen, a 9% decrease on a year on year, non-consolidated basis. Ordinary profit was 5.1 billion yen, an 18% increase compared with the previous year's figure, while net income also increased to 4.8 billion yen, a 95% jump from last year's posting. For the period, orders received rose by 1% to 1.29 trillion yen.

As part of the company's top priority to improve financial results, efforts have been made to expand the development and marketing of new products, and increase the number of orders received. In addition, the company pursued more efficient management activities and business unit competitiveness to strengthen its group companies.

Background

In the first half of the fiscal year, the Japanese economic climate improved due to investment in public works projects and supportive policies in areas such as the taxation system. Furthermore, there was a trend towards recovery in personal consumption and housing investment. However, private capital expenditure remains inactive and there is still no improvement in the employment and income environment. As for overseas, even though fear of inflation has not been completely wiped out, the U.S. economy is mostly becoming bullish while the European economy generally continued to expand. In Asia, while the trend towards business expansion in China was further refined, South Korea and other countries made rapid business recoveries.

As the economy became increasingly borderless, domestic and overseas market competition intensified, and prices continued to decline, difficulties in the management environment intensified.

Dividend

While Mitsubishi Electric Corporation regrets that it passed over the first installment of its biannual dividend payment last year (September 1998), the company has since adopted a policy to maintain long-term, stable dividend payment, and made a dividend payment of 2.5 yen in September this year. (Reference: the second installment of biannual dividend payment was 3 yen in March 1999).

Results by Business Segment

Heavy Machinery decreased both in sales and orders on a year on year basis. Sales fell 18% to 229.6 billion yen while orders dropped 10% to 251.4 billion yen. The thermal and nuclear power generation sectors experienced a fall in orders due to restraint in capital investment and the lack of large orders. Sales fell on a year on year basis due to the decline of overseas sales, though domestic sales have leveled off. Both orders and sales of electrical equipment for manufacturers fell for the period, which can also be traced to the general decline in capital investment activities. Orders for electrical equipment for trains remained at the same level due mainly to an increase in demand in the overseas market, and sales improved significantly on the strength of large orders from Japan Railways and public railway corporations. Although sales in public works projects declined, orders increased from the previous year due to steady growth in public investment. The company's building systems operations, with the fall in demand of vertical transportation (elevators and escalators), both overseas and at home, marked a decline in both sales and orders.

Industrial Products and Automation Equipment saw an increase in orders, but sales declined on a year on year basis. Sales declined 4% to 255.3 billion yen while orders increased by 2% to 258.2 billion yen. Sales of factory automation equipment such as programmable controllers and servos declined on a year on year basis. This is attributable to the sluggish demand at home, except for the growing industries including semiconductors and LCDs, and the low demand in exports, especially to the U.S. and Europe. Sales of motor and power distribution equipment saw a decline on a year on year basis due to restrained capital investment in the manufacturing sector.

Electric discharge machines, laser processing machines, numerical controllers, and industrial robots saw a decline in sales on a year on year basis, due to the restrained capital investment in domestic industries, such as automobiles and electronics, and the decline in exports bound for the U.S. and Europe.

Car audio and automotive electronics enjoyed a steady increase on a year on year basis, mainly due to the increase in exports of car audio products and the increase in sales to U.S. compact car manufacturers.

Information, Telecommunications and Electronic Systems and Devices experienced a decline in sales, however orders showed growth on a year on year basis. Sales were off slightly by 6% to 550.1 billion yen while orders rose 10% to 626.2 billion yen. In the semiconductor group, although DRAM prices fell, the sales level surpassed last year's. This is the result of the expansion of single unit products integrating SRAM and flash memory chips, utilized in portable phones, and system LSI devices for digital audio-visual products and automobile equipment.

The computer division, while demand increased through governmental counter measures to stimulate business in the public sectors, experienced a decrease in sales compared to last year. This is in part the result of low IT investments by private companies. Mitsubishi Electric's telecommunications business, domestic portable phones, ground station systems and optical submarine cable systems were rewarded with favorable results. Sales, however, were lower than last year's figure due to a decline in equipment exports brought on by the overseas localization of portable phone production. Space business slightly dropped as a result of the partial delay of satellite operations schedules in the U.S. and Europe, which are major export markets for the company.

Consumer products operations saw decreases in both sales and orders on a year on year basis. Sales declined 13% to 152.0 billion yen, while orders fell 13% to 154.0 billion yen. Amenity products for humidity control contributed to expanded sales in the home appliance business, owing to consumers' enhanced health consciousness. However, air conditioners and refrigerators fell under the previous year's figures, due to unseasonable weather and lowered prices. This has led to an overall decline within the home appliance business as a whole. Steady business with ventilation fans, and an expansion of new businesses such as hand dryers, smoke separation systems, and solar generation has brought on an increase in the housing equipment business. The company's audio visual equipment business increased shipments, but decreased in sales. Volume increase was established by new product marketing, such as color TV sets; however, sales decreased due to a fall in prices.

Annual Non-consolidated Forecast for Fiscal 2000 (April 1, 1999-March 31, 2000)

In the current unforeseeable condition where exchange rates remain unstable and business recovery is slow, Mitsubishi Electric will further consolidate cost reduction in fixed costs and procurement costs. The company is also determined to fully conduct financial improvement measures which include business structure reform in the semiconductor business. Every effort will be made in order to achieve the figures set in May this year as the forecast for the entire fiscal year 2000.

The company forecasts the following business results for its non-consolidated operations in the fiscal year ending March 31, 2000:

Orders received: 2.77 trillion yen (3% increase on a year on year basis)

Net sales: 2.70 trillion yen (3% decrease on a year on year basis)

Operating profit: 45 billion yen (27% increase on a year on year basis)

Ordinary profit: 20 billion yen (299% increase on a year on year basis)

Net income: 12 billion yen

NON-CONSOLIDATED HALF-YEAR RESULTS OF MITSUBISHI ELECTRIC

April 1- September 30, 1999

NON-CONSOLIDATED HALF-YEAR SALES BY PRODUCT SEGMENT

April 1 - September 30 , 1999

(in billions of yen)

MANAGEMENT POLICY

Mitsubishi Electric Moves from Countermeasures Against Non-profitable Businesses to Positive Promotion of Strategic Businesses

In this world of severe market competition, the company has endeavored to carry out measures to unify its group companies in order to strengthen business competitiveness and ensure stable management and growth in the future.

Currently, the company has pushed to strengthen its managerial promotional functions, and with the adoption of independent management of business groups and affiliated companies, structural reforms have been taken to counter unprofitable business segments such as semiconductors, audio-visual, and information systems. Furthermore, in order to strengthen responsiveness to the changing managerial climate, the company is pursuing reform by taking structural measures against high costs and optimizing the allocation of human resources.

In addition to these plans for improvement in short-term business results, this fiscal year the company has put forth a mid-term plan to set targets for the fiscal year 2001 as a measure to strengthen management from a mid and long-term point of view. Due to brighter prospects for business structure countermeasures in areas that greatly affected business results such as semiconductors and audio-visual, this mid-term plan reverted to a viewpoint of "countermeasures against non-profitable businesses to positive promotion of strategic businesses" with the intention of allocating important resources to strategic businesses and expanding the managerial foundation. With business groups such as next generation telecommunication systems, satellite systems, ITS (intelligent transport systems), and IT (information technology) as core businesses, and IT supporting businesses such as System LSI, the company expects great future growth while it strengthens its ever-important strategic businesses.

Furthermore, regarding core businesses such as heavy machinery, industrial products and automation equipment, and automotive electronics, the company will accelerate investments in systems and products that are IT-friendly. While strengthening competitiveness, the company plans to expand sales by developing global businesses.

This is the managerial foundation and policy that will make Mitsubishi Electric a strong company in the 21^st century and mid-term corporate plan targeted for the fiscal year 2001 marks this beginning.

Mitsubishi Electric will strive forward to meet the expectations of its stakeholders and challenges of the future.

The main business targets (consolidated) for the mid-term plan for the fiscal year 2001 are as follows:

Y2K COMPLIANCE AT MITSUBISHI ELECTRIC

Although it is difficult to clearly distinguish the expenditures for Y2K compliance, we estimate that the Mitsubishi Electric group as a whole will spend a total of about 8.0 billion yen on outside services related to product and system studies and upgrades, and upgrades to information systems and production equipment. Of this figure, approximately 3.9 billion yen was posted to expenses for fiscal 1998, and an additional 2.4 billion yen was posted during the first mid-term accounting period. We do not anticipate these expenses having a significant impact on our results or cash flow in the future.

Mitsubishi Electric and its group companies have done everything possible to bring products and systems into Y2K compliance and are confident that this has been accomplished. However, we have also formulated risk management plans as described below to vouchsafe operations and minimize the impact on our business and our customers in the event of unforeseen circumstances.

Mitsubishi Electric and its group companies are keenly aware of the need to respond to the Y2K bug. We cannot, however, declare that we have fully and completely averted all influences on our business and all problems in our products as there may be circumstances that are beyond our control. Nonetheless, we will continue to enhance and reinforce our risk management so as to minimize the impact should problems arise.

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About Mitsubishi Electric Corporation

With more than 75 years of experience in providing reliable, high-quality products to both corporate clients and general consumers all over the world, Mitsubishi Electric Corporation is a recognized world leader in the manufacture, marketing and sales of electrical and electronic equipment used in information processing and communications, space development and satellite communications, consumer electronics, industrial technology, energy, transportation and construction. With operations in 34 countries, Mitsubishi Electric Corporation recorded consolidated group sales of over US$31 billion in the year ended March 31, 1999. Additional information on Mitsubishi Electric Corporation is available at global.mitsubishielectric.com.