Mitsubishi Electric
Key Growth Businesses
Nov 8, 2021
Mitsubishi Electric Corporation©Mitsubishi Electric Corporation

Approach to Business Portfolio Strategy
Classify businesses according to their characteristics and optimize investment ofmanagement resources.
Key Growth Businesses

Resilient Businesses<Growth drivers that have the potential to become
global leaders in growth markets, and lead toinnovation for addressing social challenges>

Towards
Resilient Businesses

Scale up and increase profitability throughconcentrated investment in growth
Revenue of ¥2.6 trillion / growth rate of 8%(CAGR for FY2020-FY2025)

Operating profit margin of 13%(FY2025 : Total of Resilient Businesses)

Value Recapturing Businesses
JudgeProfitability<Have stable demand and contribute to ourresilient management regardless of market
fluctuation>
Expand profitability
through efficient investment
Revenue of ¥1 trillion
Operating profit margin of 9%

Use existing resources to gain new added
value that meets market demands(FY2025 : Total of Key Growth Businesses)

Shiftresources

Businesses with issues

Consider selling/withdrawing from less profitablebusinesses falling below a set thresholdLow©Mitsubishi Electric Corporation

Business growth potentialPotential Businesses/Newbusinesses

Towards
Key Growth Businesses

HighExpand data linkage/utilization-type solutions
businesses
Reform business models of existing businesses
and create next-generation businesses

High2

Initiatives in Key Growth Businesses
Factory Automation (FA) Control Systems Business [PLC, Servo, and CNC]
Help build a foundation for industry and technological innovation by globally providing machines,equipment, and solutions that realize the automation of manufacturing, improving quality andproductivity.
Air-Conditioning & Refrigeration Systems BusinessContribute to creating a safe, secure and comfortable society and achieving a decarbonized society
as a global comprehensive air-conditioning & refrigeration manufacturer offering excellent airconditioning and ventilation technologies as well as life cycle solutions.
Building Systems Business
Decided to establish a new company(*) which realizes integrated business operation covering new
installations to maintenance and replacement, in order to strengthen global competitiveness.
Realize Smart Buildings and Smart Cities by providing solutions making use of accumulated
technologies and data, as well as multi-business synergies.
* Mitsubishi Electric Building Solutions Corporation (Scheduled to establish in Apr. 2022)

Automotive Equipment Business (xEV/ADAS)
Contribute to the global environment and safety/security through product development using
our xEV technology (power device, cooling, high density winding) and ADAS technology (highprecision-positioning, millimeter waves, image recognition).
Power Semiconductor Devices Business
Focus on the automotive/consumer product fields where high growth is expected, using IGBT/SiC
cultivated through business synergies. Contribute to a decarbonized society by providing key
devices that save energy in equipment.
ADAS: Advanced Driver Assistance SystemSiC: Silicon Carbide©Mitsubishi Electric Corporation

IGBT: insulated Gate Bipolar Transistor

3

Open Innovation

Expand our solution domain by leveraging external knowledge and technology through means
such as M&As, co-creation with customers and partners, and collaborations with start-ups.

(Concluded a contract in Aug. 2021)

Combine the advanced DERMS technology of SGS Ltd.,
which has experience doing business in Europe and the US,
with our technology and customer base.
Aim to become a leading company in the DERMS market,
which is expected to see a global surge in demand.

* SGS Ltd.: Smarter Grid Solutions Limited

Co-create value with customers and partners
Establishment of 5G OPEN INNOVATION Lab(Jun 2021)

Opened a place for co-creation related to local 5G withcustomers and partners.
Participants review local 5G use
cases and carry out a wide rangeof pilot tests such as 5G-based
automated/remote control ofmobile robots.

DERMS: Distributed Energy Resource Management System©Mitsubishi Electric Corporation

Searching for the missing pieceto create new value

Joined CIC Tokyo’s Innovation Community for
Energy and Environment to search for, support, andcollaborate with start-ups.
(Started activity in Oct. 2020)

Implemented a proprietary acceleration program
under the theme of ”smart city” in partnership withRainmaking.
(Started activity in Jan 2021)

Create new value by collaboratingwith multiple industries
Establishment of Satellite Data Services Co., Ltd.(Jun 2021)
Aims to commercialize
services providing
Satellite
information on satellite
data
Mountainous
data analysis that can beareas
Satellite Data
applied commonly acrossServices Co., Ltd.
a wide range of areas,
Analyzes, processes, andForests
such as swift
provides satellite dataandconfirmation of situations farms• Confirm situation in theevent of a disasterin the event of a disaster• Monitor infrastructure inand continuous
ordinary times
Coastalmonitoring of nationalareas
land and infrastructureduring ordinary times.

Analytical data

Acquisition of UK-based SGS Ltd.(*)

Create innovation by collaboratingwith start-ups

Analytical data

Expand business domains through M&AsRivererosioncontrolRoads
andgroundPort
revetment

4Intellectual Property Strategy

Strategy 1. Open Technology Bank

Strategy 2. Qualitative IP activity targets

Make the technological asset databasewith 60,000 IPs available to the public

In addition to quantitative advantages,
enhance qualitative IP capabilities that arecompatible with AI/solutions

Internal technological collaboration &open innovation with external parties
Mitsubishi Electric technology map
presented in OTB(*1)✅

Make it publicly available in Dec. 2021

Digitally
controlled
technology

Smartcomponent
technology

DX infrastructuretechnology

Combine these three technologies by leveraging OTB➡ Use data to solve issues in a range of social spaces➡ Contribute to sustainability(decarbonization/new normal/economic security)©Mitsubishi Electric Corporation

Link and drive forward✅ Start a search service in Oct. internally/next spring externally

Leveraging the world’s leading IP creation capabilities,
Patent asset No. of patentsize(*2)
registrationsin Japan(*3)

No. 1

in JapanNo. 2in Japan

International
application
ranking(*4)

No. of design
registrationsin Japan(*3)

globallyin Japan

No. 3

No. 1

Qualitatively improve IPs that will form theOperation DX infrastructure

Solution rate
AI rateCurrent

FY2025 target

10% ➡ 30%3％ ➡ 10%Develop and execute IP/standards strategy in theIoT domain in alignment with activities tostrengthen IP capabilitiesIn addition to utilizing IoT in areas such as FA, electricpower, and train, carry out standardization activities in thefield of future telecommunication infrastructure, such as 5G,beyond 5G, and 6G, to contribute to solving social issues
and expanding business.
*1 OTB is an acronym for “Open Technology Bank”*2 Announced by Patent Result Co., Ltd. (total from Apr. 2019 to Mar. 2020)*3 Announced by Japan Patent Office (total from Jan. to Dec. 2020)*4 Announced by World Intellectual Property Organization (WIPO) (total from Jan.
to Dec. 2020)

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Optimal Group Management System
Pursue an optimal group management system by strengthening the functions and reviewing
the division of roles of affiliated companies in each value chain.

DesignDevelop structures and strengthen the development capability of S/W design
companies that can accommodate the enhancement of Key GrowthBusinesses and the expansion of Integrated Solutions (improve productivity,increase personnel, incorporate new technology, etc.).
Scheduled to establish Mitsubishi Electric Software Corporation in Apr. 2022

Logistics

Develop a logistics system with the option of concluding strategic partnerships
with global logistics companies, and rapidly respond to changes in the logistics
environment and improve efficiency by introducing an advanced platform.

Maintenance &Service

Enhance our recurring revenue business by taking advantage of connection
with customers, establish a business structure that maximizes lifetime profits,
and create new business opportunities by sharing and making effective use ofinformation accumulated within the Group.

Internal Operation
Support

Focus on employee welfare and tasks essential for rolling out each of ourbusinesses, and improve efficiency primarily through the use of outsourcing.

©Mitsubishi Electric Corporation

6Priority Allocation of Resource Investment
Invest resources in the amount of ¥2.8 trillion, up ¥0.8 trillion from the previous medium-term management plan, centered on
Key Growth Businesses. Attain the FY2025 financial targets (revenue of ¥5 trillion, OPM of 10%).

Resource Investment (*1)
Previous Medium-termManagement Plan
(FY2016-FY2020)

New Medium-termManagement Plan
(FY2021-FY2025)+¥0.8tn¥2.8tnStrategic
investment

M&A¥0.1tnInvestment in DX andinformation security¥0.2tnCapitalinvestment¥1.2tnCapitalinvestment¥0.9tn¥0.5tnKey Growth Businesses
44% (*2)

R&D
expenses¥1.1tnKey Growth Businesses
Approx. 60% (*2)

• Separately set an amount of approximately ¥0.5 trillion for strategic investment(M&A, etc.). Focus allocation of budget in Key Growth Businesses and flexibly
make investments.
• Break down ROIC by location and business. Maximize efficiency of invested
capital by utilizing ROIC also for business evaluation and investment decisions.

Value
Resilient Recapturing
Businesses Businesses,etc.

Key GrowthBusinesses(M&A, etc.)

R&D
expenses¥1.0tn©Mitsubishi Electric Corporation

FY2025 Financial Targets
Revenue: ¥5 trillion / OPM: 10%

FY2025

FY2025OPM¥2.0tn

Revenue / Operating Profit

FY2020
FY2020

FY2025
FY2020

Revenue*1 Allocation to growth investment, etc. (M&A and other strategic investment, R&D expenses, capital investment)*2 Ratio of Key Growth Businesses to total investment in all business divisions (excluding investment in non-business divisions)7

FY2025 Financial Targets
Revenue¥5 trillion

Operating Profit Margin

10%

ROE

10%

Cash Generation(*)¥3.4 trillion/5 years* Adjusted operating cash flow (CF)©Mitsubishi Electric Corporation

8Cautionary Statement

While the statements herein including the forecast of the Mitsubishi Electric Group are based on assumptions the Group considers to bereasonable under the circumstances on the date of announcement, actual results may differ significantly from forecasts.
Such factors materially affecting the expectations expressed herein shall include but are not limited to the following:
1.
2.
3.
4.
5.
6.
7.
8.
9.

Any change in worldwide economic and social conditions, as well as laws, regulations, taxation and other legislation
Changes in foreign currency exchange rates, especially JPY/dollar rates
Changes in stock markets, especially in Japan
Changes in balance of supply and demand of products that may affect prices and volume, as well as material procurement conditions
Changes in the ability to fund raising, especially in Japan
Uncertainties relating to patents, licenses and other intellectual property, including disputes involving patent infringement
New environmental regulations or the arising of environmental issues
Defects in products or services
Litigation and legal proceedings brought and contemplated against the Company or its subsidiaries and affiliates that may adversely affectoperations or finances
10. Technological change, the development of products using new technology, manufacturing and time-to-market
11. Business restructuring
12. Incidents related to information security
13. Large-scale disasters including earthquakes, typhoons, tsunami, fires and others
14. Social or political upheaval caused by terrorism, war, pandemics, or other factors
15. Important matters related to the directors and executive officers, major shareholders and affiliated companies of Mitsubishi Electric Corporation©Mitsubishi Electric Corporation

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