Life Business AreaMay 2023
Mitsubishi Electric Corporation

Index1. Executive Summary

P3

2. Life BA
2-1. Business Structure

P62-2. The Ideal Form

P72-3. Strengths

P8

3. Building Systems Business
3-1. Market environment and growth directions

P103-2. Key strategies

P11

４． Air-Conditioning & Refrigeration Systems Business
4-1. Market environment and growth directions

P14

4-2. Key strategies

P15

4-3. Manufacturing and development strategies

P16

５． Portfolio Strategy in BA

P17

６． BA Synergy Strategies

P19

1

Executive Summary

Executive Summar yAim for sales of approx. 2.4 trillion yen and an operating margin of 11% or more in FY2026 by promoting growth andsynergy strategies in the HVAC&R business and the building systems business.

•In Life BA, aim to become a solution provider that creates comfortable, safe and secure environments in all sortsof spaces for living, in addition to strengthening business strategies for individual facility businesses.

•Building Systems Business steadily improves profitability by enhancing recurring revenue business model,

strengthens the portfolio of elevator/escalator products, and reaps the effect of business integration by Mitsubishi
Electric Building Solutions Corporation, to further enhance Building Solutions Business.
•Air Conditioning Systems & Home Products Business concentrates resources into HVAC&R* Business centering on

Air-Conditioning & Refrigeration Business, which is one of the mainstay Key Growth Businesses. Investment toexpand ATW Business in Europe and ductless air conditioners in U.S., and to grow business in India, thereby
accelerating the improvement of a system for local production/local consumption.
* HVAC&R is an acronym for Heating, Ventilation, Air Conditioning & Refrigeration, standing for equipment and facilities relating to the foregoing.

•Combine the strengths of both businesses with digital technologies to evolve into Life BA’s integrated solutions,
namely (1) green energy solution, (2) safe, secure & comfortable solution, and (3) buildings management solution.

２Life BA

Life BA Business StructureLife BA consists of Air Conditioning Systems & Home Products segment centering on HVAC&R area and Building
Systems segment.

Home products area

Life BA Revenue

Business/industrial use and building systems area
Building managementsystems

Building systems

HVAC＆R【Service by product】●Sale, production and installationof equipment●Maintenance and remote control●Renewal

System control by connecting energy
saving equipment and sensors

HVAC＆R Business

Air Conditioning Systems& Home Products
Multi-functional ACfor buildings

Building Systems

Air-cooled heatpump chiller

Packaged AC
for facilities

LightingElevators

HVAC＆R

HVAC＆R Business

Air Conditioning Systems & Home Products

Room air conditioners

AC indoor unit

Ventilator
Lossnay

Ventilation fan【Whole-building service】●One-stop proposals（From consultation on introduction tosupport）●Energy management●Smart solution proposals

Escalators

Air conveyancefanATW(Air To Water)

Heat pump water heater

Housing equipment& home appliances businessNetwork cameras（video monitoring system）

Refrigerator
Hot water supplysystem

DC powerdistributionsystem

Power receiving/transformingequipment

UPS(UninterruptablePower Supply)

Emergency power
generation equipment

Access control system

The Ideal Form
A solution provider that makes all sorts of spaces/environments comfortable - Create, maintain and advance -Green energy solution
Carbon neutral

Energy conservation/electrification at
facilities ＋ Energy demand forecast andCircular
Digital-Engineering supply data

Safe, secure andcomfortable solutionSafety / Security

Well-being

Operation data management ＋ Robotutilization ＋ Data on flow of people
Circular
Digital-Engineering Lower lifecycle costs,
Lifeline maintenance, Personal space optimization
Remote monitoring/control

Strong global networks × Abundant field knowledge

Global sales network

Global maintenancenetwork

Energy conservation
Higher efficiency

Operation data ＋ Device sensing forabnormal signals prediction ＋ Human sensory
Circular
Digital-Engineering data ＋Data on flow of people

Demand response, Energy conversion

Ties with many customers

Buildings management
solution

Data utilization × New/advanced technologies

Integrated operation system/knowhow

Data utilization

Circular businessmodelOperation data

Field knowledge

Digital technologies

Algorithms

Digital Twin

Controlling flow ofpeople
Failure prediction

AI data analysis

and more

Enhanced components and systems utilized in a wide range of situations
HVAC & R

Elevators & Escalators/buildings management systems

Infrastructure

Cloud infrastructure

Strengths of Life BA
Our strengths(1) Broad-ranging facility business enabling creation ofenvironments• HVAC＆R (ultra low-GWP refrigerants, energy-efficient HP*technologies）• Elevators/buildings management systems (higher efficiency)• DC power distribution systems, power receiving/transforming
facilities (control technology)(2) Safe and secure technologies and accumulated data

• Knowledge cultivated in field services• Data obtained and accumulated from various equipment andknowledge in maintenance/operation/management• Various system technologies(3) Strong customer base and abundant assets• Strong relationships with global business partners andsales/maintenance networks※HP：Heat Pump

Business strategies
Growth strategies• Evolve and expand Components business and Maintenance &Service business• Develop into Integrated Solutions, away from the one centered onfacilities
Key initiatives• Concentrate investment in HVAC&R and Building Systems businesses• Establish a foundation for global business by enhancing systems for
local production and consumption• Expand and enhance our recurring revenue business
Pursue synergies• Coordinate the service foundation for Building Systems business andthe sales foundation for Air-Conditioning & Refrigeration Business• Collaborate with Infrastructure BA to “generate, transmit and utilize
energy efficiently”

3

Building Systems BusinessBuilding Systems Business ーMarket environment and growth directions ー
Demand for maintenance/renewal is rising in the elevator/escalator market and needs for solutions are expanding in
the entire building market. Leveraging our strengths of globally operating business base formaintenance/operation/management, technologies, field knowledge and customer assets, focus on efforts to enhancerecurring revenue business model and expand building systems solutions, aiming to achieve the medium-termmanagement plan.
Trend in demand
Building market•

Mid-term plan
＜Smart buildings*＞¥trillion

Needs of building owners and users diversify, requiring improved value of0

Acceleration in initiatives for carbon neutrality

Asia and otherElevators/escalators

Japan, Europe andthe U.S.

Demand for new installation slows down, while that for
maintenance/renewal is expanding•

Non-manufacturing elevator service providers’ business is expanding•

Business model is shifting to accommodating maintenance/renewal of
multiple brands••

Growth in demand for high-end models slows down, while that for
mid-range ones, which account for a large portion of the market
segment, is expanding

0.7

FY20210.6＜Elevators Global＞¥trillion
10CAGR
3.7%＜Elevators Japan,
Europe and the U.S.＞¥trillion
10550
FY2021

FY2026

Maintenance/renewal
New installation¥0.6tnFY2026

CAGR
5.2%＜Elevators
Asia and other＞¥trillion
5CAGR
1.3%
0７％
¥0.５tn
5％

0.5

0.4

0.3

0

Demand is recovering to the pre-pandemic level¥0.7tn10％¥trillion• e.g. life cycle cost reduction, energy conservation, labor saving, etc.

•CAGR
11.4%

10buildings•

Upper figure：RevenueLower figure：Operating profit margin

0FY2021FY2024

FY2026

Maintenance/renewal*Assumed values by Mitsubishi Electric. For Smart Buildings, it includes facility monitoring and control function and data linkage function in building management on a global scale.

Building Systems BusinessーKey strategiesー⚫ Expand globally our recurring revenue businessfocusing on elevator and escalator business⚫ Number of units we service： 1,000,000 units to
1,300,000 units
Building systems mid-term plan

Key strategy 1

Strengthen the product portfolio ofelevators/escalators to dominate the midrange model market•

Enhance both global models and regional strategic models•Optimize global supply chain management to develop strategicmodels•

Strengthen development by establishing a global R&D system
Global bases for development/production¥0.7tn¥0.6ｔｎ5%
FY2023
actualStrengthen theproduct portfolio ofelevators/escalators

Expandmaintenance/renewal
business throughmultiple brands andby M&As

□ indicates main products developed
and produced* EV: elevator, ES: escalator■ Global high-end model EV■ High-end model EV for China

Deliver a new solution
business throughcooperation with otherBAsMOVE10%

Machine-roomless elevator forEurope■ Mid-range model EVfor Europe■ Global mid-range EV&ES■ EV&ES for China
China

Netherlands

South Korea

India

Expand our recurring
revenue businessTaiwanThailand

FY2026
forecast■ Global high-end model EV&ES

DeLITE
Machine-roomless elevator forIndia

MexicoChina

Mother factory

Japan (Inazawa）

MexicoColumbia

Indonesia■ Global ultra-high-speed special EV&ES■ EV&ES for Japan
Globalproduction
base

Regional
supply baseParts supplybase

Building Systems Business
Key strategy 2•••••••Hanshin Yusoki Co., Ltd.
(Japan)From 2020

Motum（Sweden)
From 2022

Continued investment
in strategic regions(Japan, Europe and the U.S.）

Synergy with Air-Conditioning & Refrigeration Systems BusinessMutual utilization and efficient management of the infrastructure, know -how and customer
assets between the sales base of the Air-Conditioning & Refrigeration Systems business andthe maintenance and service base of the Building Systems business, respectively.
Expansion of added value for an entire building, from individual facility sales to maintenanceand renewal
Provision of Circular Digital-Engineering solutions using digital technology.
Key strategy 4••

Increase the number of units we service formaintenance/renewal

Expand the maintenance service contract rate by offering remote monitoring
system; Strengthen business platform for maintenance/service business; Enhanceboth global models and regional strategic models
Expand maintenance/renewal business through alliance with independent
maintenance operators and by M&As
Strengthen efforts to accommodate maintenance/renewal of multiple brands
Key strategy 3•ーKey strategiesー

Shift resources and improve efficiency to build an optimum
one-stop business structure, spanning development toproduction, sales, maintenance and renewal

Increase capability to offer one-stop service to customers and improve service quality
Strengthen capability to develop maintenance/renewal menus, in addition to component
development
Improve operational process, streamline organizations and shifting management resources tosolution business
Develop foundation to utilize maintenance service infrastructures and data

Scale of maintenance/renewal business¥trillion
0.5

FY2021→FY2026
CAGR
7.7%

0.4
0.3
0.2
0.1
0
FY2021

FY2022

FY2023

FY2024FY2026

4

Air-Conditioning & Refrigeration Systems BusinessAir-Conditioning & Refrigeration Systems BusinessーMarket environment and growth directions ーAir-conditioner market, our main target, continues to expand globally amid the global trend for carbon neutrality andwell-being. Revenue plan of ¥1.5 trillion for FY2026 as of the announcement of Key Growth Businesses in Nov,2021 isexpected to be achieved two years ahead of the planJapanChina
Southeast Asia

•F-gas regulations are expected to prompt a shift to low-GWP (natural)
refrigerants. The pandemic has generated new trends, such as thepursuit of air quality and comfortability.

•Despite boasting of the world's largest demand for air conditioning,the demand trends are slowing down due to low economic growthrate and sluggish real estate and housing.

•While air conditioning market is expected to grow in tandem witheconomic growth, energy saving regulations and standards are being
introduced in each country.

2.0¥1.5tn
11％

¥16tn
15

1.5

¥12tn
10

1.0

5

0.50

FY2021

FY2026plan*

FY2026
forecast0¥1.0tn
7.3％

FY2021

FY2026plan**As of the announcement of Key Growth Businesses in November 2021

¥1.5ｔｎ7.3％

FY2024
forecast¥1.7tn11％

Refrigeration

India

The market is projected to expand into the world’s largest size in thefuture due to economic growth and an increase in the middle income
class with purchasing power. Demand for repair/maintenance emerged
and is growing.

¥20ｔｎ

20

Air-Conditioning &•¥trillion

Refrigeration

U.S.

Rebate programs to promote decarbonization/ adoption of heatpumps, inflation reduction act and others were set forth as new statepolicies. Demand is expected to surge for highly-efficient ductless
products.

¥trillion

Air-Conditioning &•Upper figure：Revenue
Lower figure：Operating profit margin

Refrigeration•Air Conditioning Systems &Home Products revenue plan

Air-Conditioning &EuropeA shift in thermal energy conversion (from combustion system toelectric heat pumps） triggered by global warming accelerates further
due to energy crisis, causing demand for ATW to surge.
F-gas regulations are expected to prompt a shift to low-GWP (natural)
refrigerants.

Global demand& Refrigeration•Growthtrend

Air-Conditioning

Market trend （by region）

FY2026
forecast

Air-Conditioning & Refrigeration Systems Business ーKey strategiesーIn addition to North America and Europe, we position the Indian market as the key focused market, where significant
growth is expected for a medium to long term. Intensively allocate resources to these strategic markets.
Air-Conditioning & Refrigeration Systems

Key strategy 1

mid-term plan

• Concentrate on HVAC＆R Business with Air Conditioning & Refrigeration Business at thecore¥1.5 tn

Key strategy 2

Expansion in India
Increase revenue in India• Concentrate resources into growth markets

Ultra-low GWP model• Strengthen regional strategies based on local
production for local consumption in themarkets of Europe, U.S. and India

Increase revenue in U.S.

and others, withsolutions

with ultra-low GWP

ExpandATWKey strategy 3¥1.1 tn• Strengthen solution business through user
support throughout the life cycle, including
maintenance7%

refrigerants

12%

Business
Increase revenue in Europe,
centering on ATW Business

FY2023
actualFY2026
forecast

Air-Conditioning & Refrigeration Systems BusinessーManufacturing and development strategies ー
Manufacturing strategy: To address surging demand in Europe, the U.S. and India, establish a global operational foundation through strengthening asystem for local production/local consumption
Development strategy: Further refine our energy-saving and environmental-conscious technologies （refrigerant conservation and new refrigerants） tocontribute to a decarbonized society; Establish and reinforce a global R ＆D center to support local production/local consumption

Investment for new establishment/capacity increase of AC production bases

Strengthen development of natural/ultra-low GWP refrigerants

Investment in bases in India• Europe: R290 natural refrigerant adopted➢ ATW: To be introduced in July 2023
➢ Room air conditioners: To be introduced in FY2025• U.S.: 454B ultra low-GWP refrigerants adopted➢ Room air conditioners: To be introduced in FY2025

Global manufacturing investment
Accumulated total （from FY2022 to FY2026）¥240 bn¥245 bn

FY2026plan*• Local production rate in FY2026 : 50%（Increase by 30%)

FY2026
forecast*As of the announcement of Key Growth Businesses in November 2021

FY2026
plan*

Europe and U.S.

Europe and U.S.

New

Strengthen global development capability
Establish local Ｒ&Ｄ centers in Europe, Americas, Chinaand Asia. Execute development tailored to local needs.
refrigerants inIndia¥200 bn
Europe and U.S.,

U.S., India

Investment in bases in NorthAmericaEurope and¥180 bn• ATW Business investment: ¥80 billion
Accumulated total （from FY2022 to FY2026）• Local production rate in FY2026 : 60%（Increase by 10%)

Accumulated total （from FY2022 to FY2026）

New refrigerants inInvestment in bases for Europe

Global development investment

FY2026
forecast5Portfolio Strategy in BA

Por tfolio Strategy in BA
To achieve an ideal Life BA, assess the feasibility of each business and concentrate resources into the core HVAC＆Ｒand Building Systems Business areas. Less profitable businesses falling below a certain threshold shall be terminatedupon judging feasibility, to conduct resource shifting.

HighGrowthpotential》《Low

Building Systems

HVAC&R

Elevator, escalator and building management systems

Heating, Ventilation, Air Conditioning & Refrigeration

Higher efficiency andenhanced
competitivenessHousing equipment＆ home appliances*except HVAC&R

Digital media
equipment, etc.

Low

Business growththrough intensive
investment

Resource shifting to Key GrowthBusinesses
Judgements onbusiness《Profitability/asset efficiency》

High6BA Synergy Strategies

BA Synergy Strategies
Create Integrated Solutions to pursue synergies for expanding into Circular Digital-Engineering Business⚫ Evolve the existing system solutions within the BA into Integrated Solutions and new value proposition, poweredby data utilization⚫ Deliver a new solution business through cooperation with Infrastructure BA and DX Innovation Center
Existing system solutions
Remote supervision
Watch over a family member living
far away without disturbing

Remote monitoring/maintenanceservice
Abnormality alarm, refrigerant leakage
diagnosis, operational data browsing

Contribute to decarbonization bysupporting ZEB introduction as a
one-stop service from design tooperation

Enhance services utilizing a smart
city/building IoT platform

Energy management
service

Mobility support
service using robots～Furthermore, Create, maintain and advance～
Integrated Solutions
Green Energy Solution
Carbon neutral

Safe, Secure and ComfortableSolution

Safety/ Security

Well-being

Buildings ManagementSolution
Energy conservation
Higher efficiency