2021 Medium-Term Business Plan (MTBP)(FY2021 – 2023)

October 30, 2020
Seiji Izumisawa, President and CEO© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

To begin…
 Issuing 2021 MTBP six months early•

Due to the COVID-19 impact, adverse changes in the thermal power businessenvironment, and a strategic change in commercial aviation, we have decided
to make a full update to 2018 MTBP with the publishing of 2021 MTBP Main points of 2021 MTBP•

Rapidly return to and strengthen profitability•

Clear direction for strong growth going forward Return to and strengthen profitability•

In addition to recovering from COVID-19 impact, address challenged
businesses, decrease SG&A and achieve 7% business profit margin in FY2023

 Opening up growth areas•

Focus primarily on Energy Transition and New Mobility & Logistics, invest
180 billion yen during 2021 MTBP into these areas, expand new businesses to
1 trillion yen by FY2030© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

2

Contents

Ⅰ. MHI Group Vision
Ⅱ. 2021 MTBP Positioning & Targets
Ⅲ. Measures for Commercial Aviation Systems
Ⅳ. Plan to Strengthen Profitability
Ⅴ. Developing High Growth Businesses
VI. Summary© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

3

Ⅰ. MHI Group Vision© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

MHI Group Mission
Integrate cutting-edge technology into expertise built up over many years to provide
solutions to some of the world’s most pressing issues and provide better lives

Core strengths
 Infrastructure systems that
support our modern lives

Global Issues & Trends
Climate Change Defense products that protect
us on land, at sea and in the air

Shrinking working
population

 Space and deep sea systems
that open up unknown parts of
our world and universe

Higher volume andcomplexity in logistics

 High performance, highreliability products• High temperature, high speed,high pressure• Complex and large-scale
structures and systems• Optimized control of largescale systems© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

New types of threats likecyber attacks
Electrification, intelligenceand digitalization
Shift in value fromownership to usage

MHI Group’s Key
Focal Themes Realize a carbon neutral
world• Upgrading of current
infrastructure• Decarbonization anddiversification of fuels• CO2 conversion and usage• Air conditioning and chilling withnatural refrigerant Improve quality of life
• Smart and networked machinery
systems• Automation of logistics• Electrified and intelligent mobility
and industry

 Build a safer world• Integrated defense• Cybersecurity
5

MHI Group in 2030
Drastically increase our corporate value through the primary growth engines ofEnergy Transition and New Mobility & Logistics while managing our portfolio
Business Areas & Scale(in hundred million yen)

Hydrogen, CCUS etc.

3,000

Energy &Environment

New Areas

Infrastructure© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

Combine strengths in existing businesses andintelligent systems to expand our business into highgrowth areas like mobility and logistics, e.g. CASE, cold
chain and electric components

Aircraft, Defense & Space

Aircraft, Defense & SpaceFY23Work toward a carbon neutral 2050, by driving forward
the energy transition through collaboration acrossinternal disciplines, and externally

Infrastructure
7,000

FY20

Energy & Environment

FY30

Aircraft and Space: Expand business areas
Defense: Integrated defense systems across land, sea,
air and space, unmanned and minimally manned
technologies, and cybersecurity
CCUS: Carbon dioxide Capture, Utilization and Storage

CASE: Connected, Autonomous, Shared and Electric6

Ⅱ. 2021 MTBP Positioning &Targets© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

Fundamental Principles of 2021 MTBP
Rapid transition to leap forward in 2024 MTBP and path to achieving TOP
1st half of 2010s

2021MTBP（FY21– 23）

2015&18MTBP Revenue growth to 5
trillion yen

 Business scale
expansion
through M&As

 Strengthen financial
foundation

 Structuralreforms Ongoing structuralreforms

 Return to & strengthen
profitability

 Grow new
businessesareas Accelerate growth Achieve TOP

 Return to profitability Accelerate growth（Business profit margin 7%）• Reduce fixed costs, improve
productivity• Increase after-sales service ratio• Reduce SG&A and headcount
4.70

4.49

(In trillion yen)Order intake

Revenue

3.00

2.90

EBITDA margin(excluding SpaceJet, etc.)

3.03

2.82
2.82
10.2%

8.1%
1.33

Interest-bearing
debt

3.19

FY10

3.42

3.99

2024MTBP

4.05• Drastic resource re-allocation• Strengthen investment into
growth areas• Strengthen cooperation within
and outside the Group
4.28

3.87

3.91

4.09

3.85

4.08

 Strengthen sharedfoundation• Strengthen foundationalcore technologies• Digitalization

4.17

4.04

3.50

3.70
Decline in order intake since FY14
→ Accelerate growth

3.35
12.2%

12.5%

10.8%

9.7%

8.5%

9.7%
8.3%

8.2%
6.8%

1.16
FY11

1.03
FY12

EBITDA: Earnings Before Interest, Tax, Depreciation and Amortization© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

0.96
FY13

0.98
FY14

1.05
FY15

Challenges we are facing

0.93
FY16

SG&A: Selling, General and Administrative Expenses

0.81
FY17
IFRS

0.67
FY18
IFRS

0.60
FY19
IFRS

0.95
FY20
IFRS

Lower profit since FY15
→ Return to and improve
profitability
Reduce interest-bearing debt
→ Maintain financial stability
TOP: Triple One Proportion, ratio among threemanagement factors: net sales, total assets,
and market value.

82021 MTBP Targets – FY2023 Targets

FY2023 Targets
Profitability

GrowthBalance Sheet
Financial Stability

Dividend

Business Profit Margin 7%
ROE 12%Create new businesses worth 100 billion yen in revenue
through strengthened investment in growth→ Expand to 1 trillion yen in revenue in FY30
Primary
investment
areas

EnergyTransition

New Mobility& Logistics

Total assets turnover 0.9
Maintain interest-bearing debt level
Record-high level of dividend per share
ROE: Return On Equity© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

92021 MTBP Targets – Financial indicators over time
(In trillion yen)

FY2018FY2020

FY2023

Revenue

4.1

3.7

4.0

Business profit
margin

5%

1%

7%

ROE

7%

2%

12%

Total Assets

5.1

4.8

4.5

Interest-bearing debt

0.67

0.95

0.9

Equity

1.7

1.3

1.5

D/E ratio

0.4

0.8

0.6

Equity ratio

34%

25%

33%

150 yen

75 yen160 yenDividend per share© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

102021 MTBP Targets – Capital allocation plan Strengthen operating cash flow by improving profitability, continue to monetize through asset management
 Shift investment away from SpaceJet and into priority growth areas (energy transition, new mobility & logistics)

2018 MTBP (Total 3 Years)

2021 MTBP (Total 3 Years)

Cash-inCash-inCash-out

Cash-out

SpaceJet 200

SpaceJet
3,700
RegularoperatingCash flow
7,200

Asset
management, etc.
2,500
Debt financing 1,400© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

Growth Areas 800

Expand1,600

Growth Areas 1,800

RegularoperatingCash flow
9,000

Profit-focused,others3,100

Expand 2,000
Profit-focused,others2,800
Debt repayment 900

Dividend 1,300

Asset management, etc.
1,200

Dividend 1,400

Unit: 100
million yen
11Ⅲ. Measures forCommercial Aviation Systems© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

Commercial Aviation Systems Strategy under 2021 MTBP••

• Covid-19 is temporarily depressing market, but
long-term growth expected

Passenger demand recovery forecasted for around 2024
MRO demand recovery expected to precede that of new
aircraft

250%

Long-term GrowthMarketIn preparation for market recovery expected from 2024, MHI will
increase production efficiency and drive forward new technology
development to participate in future global aircraft programs

2. Commercial Aircraft
Expanding commercial aircraft business is MHI’s long-term goal
① SpaceJet
Given current development status and market conditions, we have no
choice but to temporarily pause the majority of SpaceJet activities,
except for TC documentation. We will work to review where we stand,make improvements, and assess a possible program restart.

Market Demand Forecast

Plan Components

1. Aero Structures
200%

Global MRO Market Forecast
150%

100%

② CRJ (MRO)

TC: Type Certificate;

FS: Feasibility Study;

SpaceJet

2019

2025

2030

2035

CRJ (MRO)

Temporarily pause M90 development
activities

Develop newtechnologies（Continue TC documentation activities）

Advance
International
Cooperation
Efforts

MRO: Maintenance, Repair and Overhaul© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

2015(*) 2019=100％ baseyear demand

Commercial Aircraft Business

Aero Structure Business（Tier 1）

Undertake efforts to participate
in future international aircraft
programs

50%

0%Expand resilient MRO business and utilize commercial aircraftbusiness know-how

Build highperformanceorganization

Global Passenger Demand Forecast

Review, make improvements, andassess possible program restart
Leverage aircraft
development
knowledge

Utilize MRO
foundation andcommercial aircraft
know-how as TC
holderShare aircraft know-how andcustomer network with SpaceJet
Utilize human
Secure synergies
resources andacross Commercial
know-how in
Aviation Systems
DefenseExpand MRO
business areas
Develop MRO for
non-CRJ aircraft

Conduct FS for CRJ
aircraft upgrading13

Ⅳ. Plan to Strengthen
Profitability© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

Plan to Strengthen Profitability (1/4)
Execute various measures to achieve 7% profit margin
Path to improve business profits③Growth of existing businesses④Countermeasures/Structural shift⑤Cost reduction of SG&A*

2,800(In 100 million yen)

Impact of
COVID-19②Impact of
COVID-19
Recovery

2,150①SpaceJet
cost
minimization△950
Impact ofSpaceJet(costs to be reported
in commercial aviation
systems)

900

700

Business
ProfitMargin7%

Business
ProfitMargin△1,2001,200

5.3%
FY19実力

コロナ影響

FY2019＠4 tr yen revenue(excl. SpaceJet/ extraordinary causes)© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

SpaceJe t

0
FY20

FY2020(Forecast)＠3.7 tr yen revenue(excl. Extraordinary causes)

SpaceJe t

コロナ戻り

冷熱・物流機器の拡大

FY23事業利益

FY23Target
＠4 tr yen revenue*SG&A: Selling, General Admin Expenses
15

Plan to Strengthen Profitability (2/4)
Overcoming COVID-19 Impact
Business

Business
Environment
OutlookMeasures

Measure 1:
Minimize SpaceJet
Costs+120 billion yen

SpaceJet• Real aerospace recovery
likely in or after FY24

• Minimize SpaceJet Costs

Commercial
Aviation
CRJ• Recovery of narrowbody
aircraft will lead to fasterrecovery of CRJ andaeroengine businesses• Reduce fixed costs• Drive forward manpowersaving and automation
during COVID period• Recovery to Pre-COVID
levels expected by FY23

• Optimize overseas
production bases• Prepare for market
recovery by improving
productivity

Aero Engines

Measure 2:
Recover fromCOVID-19 Impact+70 billion yen

Turbochargers
Engines
Car Aircon
Logistics Equipment

HVAC© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

16

Plan to Strengthen Profitability (3/4)
Grow existing businesses and solve pre-COVID challenges
Business
Measure 3:
Grow existing
businesses

Logistics
Equipment
HVAC＋20 billion yen

Steam Power
Environmental
PlantsMeasure 4:
Address challenged
businesses,
structuraltransformation;(including portfolio
optimization)+30 billion yen

Measure 5:
Reduce SG&A
+40 billion yen

Metals Machinery

Engineering
Commercial Ships
Machine Tools

Business Environment
Outlook• Quick recovery from COVID• Proactively invest in
impactenvironment-responsive and• Growing market inautomation technologies
environment-responsive and• Strengthen sales network
automation technologies• Big shift to services• Steep reduction in new• Reduce fixed costs
build coal power plants• Reorganize and integrateorganization and bases• Shift to services to stabilize• COVID has frozen
profits
customer investment,• Eradicate losses in EPC
competition is growing andprojects
profitability hit• Strengthen marine engineeringbusiness

HQ Corporate
Business Units & Group
Companies© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

Measures• Aim for 20% reduction in SG&A
• Improve work processes, integrate organization,
reduce headcount• Diversify employment formats, reduce external
expenditure
17Plan to Strengthen Profitability (4/4)
Reduce workforce in line with business environment and embark on
significant shift in workforce deployment

GlobalDomestic

 Reduced workforce due to lower production in steam power, metals machinery,turbochargers, logistics equipment, HVAC, commercial aerospace etc.
(around 2,000 jobs)
 Reallocate around 3,000 of workforce due to expected reduction in steam power,commercial aerospace, commercial shipping Undergoing program to reassign workforce to growth areas, transfer to organizations
outside of Group (approx. 1,000 in H1 FY20)

Thermal Power

Commercial
Aviation

Commercial
Ships

- 20%

- 50%

2020

2024

© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

2020

2022

- 25%
2020

2022
18

V. Developing high growth businesses
Energy Transition
New Mobility & Logistics
Expansion of Services Businesses
Cybersecurity & Security
Technological Foundation to Support Growth Areas© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

Energy Transition (1/3)
MHI Group will use its technological strengths to lower and capture
CO2 emissions and achieve a carbon neutral 2050
CO₂ Vol 50GT

Decarbonization andelectrification of mobility,
residential and industry

40GT

Decarbonization of energy supply
30GT

Carbon free fuel supply
Carbon Neutral

20GT

10GT
※Scenario based on 1.5℃
scenario to achieve carbon net
zero globally by 2050
(Developed by MHI based on
IEA, IPCC etc. data)

CO2 capture and conversion

CO2 Capture
2020© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

2050
20

Current
Undertakings

Energy Transition (2/3)

Growth Areas

Combine MHI Group’s wide-ranging products and technologies to make carbon neutrality a reality
Decarbonization and Electrification
Making a carbon
neutral world areality

Mobility

Residential

Industry Electrification
 CO2 Free Fuels

 Electrification
 Energy saving

 CO2 Reduction
 Maintaineconomics

EMS・VPP Services
Hydrogen,Ammonia

Electricity

Fuel Supply (new area)

CO2

Heat

Decarbonization of Energy Supply

VPP: Virtual Power Plant

Clean Fuels,
Chemicals

CO₂ Usage (new area)(strengthen current area)

Zero CO2 Hydrogen, Ammonia
Production & Storage

 Electrolysis
 Steam reforming Thermal cracking
 Methane reforming Methane cracking

EMS: Energy Management System

Increase efficiency and performanceof conventional thermal power

Hydrogen,Ammonia

Surplus PowerHeat

Manufacture clean fuels
without emitting CO2© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

Expand renewables

CO2

Carbon Capture Capture, Transportation
 Storage

CO2 Conversion
Stabilization through storage

Use nuclear to lower CO2 emissions
Balance decarbonization andstable supply energy

Convert into
industrial materials
 Chemicals
 Clean fuels
Capture CO2 from diverse
sources and convert
to valuable resources
21

Energy Transition (3/3)
New measures to achieve carbon neutrality
Measures
CO2 free hydrogen,ammonia production
and storage
CO2 Capture andConversion

Increase Efficiency
and Performance ofThermal Power Develop efficient production technology(including venture investment) Build value chain
 Build out business based on our lead as
global No.1 in volume of CO2 captured

 Build out products and develop conversion
technology

 Develop and test world’s first pure hydrogen
fueled advanced gas turbine(Hydrogen Gas
Turbines)© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

22

New Mobility & Logistics (1/2)
 Deliver new value by systemizing diverse products leveraging digitalization and AI
 Open up new areas in mobility and logistics through cross-functional collaboration led by
Growth Strategy Office

Logistics, Thermal &Drive Systems

AGV/AGF
Natural Refrigerant
Chillers

MHI Products /Technologies

Plants & Infrastructure
Systems

External
resources

ITS

Logistics
Automated
Warehouses

New Area

Automated
Logistics
Solutions

Growth Strategy Office

Infrastructure to
support CASE*

Cold Chain

Mechanical
Parking Lots
Environmental
Testing Equipment
Railways, Shipping(chilled logistics)

M&S
Thermal Energy
Management

Electric Component
Business

Power Generation
Equipment

Energy Systems
AGV: Automated guided vehicle

AGF: Automated Guided Forklift© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

Defense Systems
Shipping, Aircraft

External
resources

CASE: Connected, Autonomous, Shared and Electric

Aircraft, Defense, SpaceITS: Intelligent Transport Systems

M&S: Modeling and Simulation

23

New Mobility & Logistics (2/2) – Example of Cold Chain
 Realize a seamless fusion between multiple systems by leveraging analytics technologies (M&S: Digital Twin),
supported by real data accumulated through logistic & environmental equipment businesses Incorporate expertise from external resources, create safer & more secure services through intelligence, andcontribute to a more sustainable environment

1. Real Data
(Grasp the functional, characteristic, performance limits)
Automated Logistics
SystemNatural Refrigerant
Chiller
Seamless fusion
between systems

Cold Chain(logistics that preserves value) Secure Qualityof Food & Medicine
 Energy Saving
 Reduce Losses acrossLogistics Chain

Thermal Energy
Management

Foundation of AI
Learning

External
Resources
Knowledge ofmerchandise
conditions tomaintain quality

Digital Twin

2. Modeling and Simulation Technologies

3. AI Technologies
M&S: Modeling and Simulation© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

24

Expansion of Services Businesses
Leverage Digital Transformation (DX) to increase
service business portfolio
Strengthen common platforms

Activities of each businesses

Advanced DX examples within MHI GroupOperation
Support••

Efficiency
improvement
Anomality detection

MaintenanceSupportSolutions••Customer portal
Long-term maintenanceproposal••Advanced Predictive
Analysis
Spare parts SCM

Expand services business through DX• Establish a taskforce to aggregate expertise
within MHI Group, share best practices, andpromote adoption of digital tools

Steam PowerStrengthen refurbish proposal
towards carbon neutrality

Compressor

Strengthen global
service structure

Aero Engine

Expand MRO businesses
Inhouse parts repair

Metal Machinery

Establish maintenance JVs
with customers
Digitalization

Engineering

Services
Strengthen
Revenueincorporation of
O&M in transportation

Defense+30%

Services
Revenue
FY20

+25%

FY20

FY23

+15%

Upgrade & MRO businesses
Repair business for US
forces in Japan

Services
Revenue
FY20© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

FY23

FY23
25

Cybersecurity & Security
 Promote measures adapted to changes in trends in defense and space, and expand dual use forprivate sector
Environment Trend

Measures in
Defense/Space areas• Utilization of information
using space becoming
more sophisticated• Strengthen the analytic
technology of wide-area
image data, “BRAINS”• Utilize analytic technologies forareas like disaster mitigation tocontribute to a safer and moresecure world• Cyber threats becoming
more apparent• Urgent need to strengthen
cybersecurity of defense
equipment• Develop and expand theapplication of “InteRSePT”, asystem to monitor theoperation of defense
equipment and detect
anomalies• Provide more sophisticatedservices by applying systems toprotect important infrastructure• Develop “CoasTitan”, an
integrated control system forunmanned vehicles (UAVs,
USVs and UUVs)• Utilize to monitor, inspect, andstrengthen services for important
infrastructure

Leverage
Space

DefendCyberspace

Dual Use for Private
Sector®

Utilize
Unmanned
Systems• More difficulty in securing
workforce due to declining
birth rate
• Utilizing unmannedsystems to maintain orstrengthen the defense
capability© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

TM

26

Technological Foundation to Support Growth Areas Utilize and incorporate technologies accumulated from across broad business areas into strategic growth products
by adjusting to the transition in customer needs and machinery systems

Energy Transition

Build a safer world

Electrification/Intelligence

Energy Integration/Management, Strengthen Data Security of Machinery Systems
Decarbonization, Carbon Recycling

Response to Disaster/Severe Environment
by Unmanned Tech. & Data Validation

Automated/Autonomous Plant
Operation

Next Generation AGV/AGF, EV Component/Mobility

New Activities to Realize Innovation

AI/Intelligence
Create new value by adding digital technologies
Digital Twin

Data Security

Sensor Network

IoT/AI

Develop unconventional functions built out fromcutting-edge technology

Data Science

Yokohama Hardtech Hub (YHH)

Automation IntelligenceOpen a “co-creation place” for start-ups torealize their ideas

Deepening tech. foundation & creating new function

Introduce Pivot Development

Operate certainly and efficiently complex machineries
and plants

3D integrated
Simulation

Innovation Promotion Research InstituteSensing

Grasp market needs/opportunities quickly, break
down new technical issues, develop at a speed that
surpasses start-ups

Robotics

Build unconventional functions
Elemental Catalyst H2 Production &Utilization
Conversion© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

AM
Utilization

AM: additive manufacturing
27VI. Summary© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

Summary 2021 MTBP focuses on strengthening profitability, investing inand developing high growth businesses•

Return to and strengthen profitability coming out of COVID-19•

Invest 180 billion yen in growth areas and create 100 billion yen in new
businesses Energy Transition and New Mobility & Logistics represent our
primary growth engines•

Drive forward energy transition aiming for a carbon neutral 2050•

Open and embed new business areas in mobility etc.

•

Nurture 1 trillion yen revenue in new businesses by 2030•

Cross-functional measures led by Growth Strategy Office© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

29

Appendix
1.
2.
3.
4.
5.
6.
7.
8.

© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

Energy Transition
Shared Foundation and Business Area
Energy & Environment
Aircraft, Defense & Space
Industry & Infrastructure (mass and medium lot manufacturing)
Industry & Infrastructure (build to order)
Materiality
TOP (Triple One Proportion)

1. Energy Transition
Zero CO2 Hydrogen andAmmonia
Production and Storage Move beyond MHI’s existing core strength inhydrogen and ammonia usage and build an entire
value chain including production
Hydrogen
Production

Primary Energy
Renewables

Zero CO₂ Fuels

Electrolysis

Existing Products
New Areas

Transport /Storage

Usage

Hydrogen
Storage

Hydrogen GT

VestasStrengthen
partnership

NuclearInvest in hydrogen
manufacturing plant
Steam Reforming/
Cracking

HTGR
development

Natural Gas

Methane Reforming(CO2 capture)/ Methane
Cracking

H2
NH3

Hydrogen production, storage andDevelop Greenhydrogen gas turbine business in
Hydrogenproduction, storage, four Southern US statesand supply business
Zero GHG emission ships
in Utah, USA
Founding Member of Mærsk McKinney Møller Center for Zero
Carbon Shipping

Hydrogen reduction insteel making

GHG: Greenhouse Gas© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

31

1. Energy Transition Carbon Capture, transport and converted usage

2016: World’s largest
Carbon Capture plant atsteam power plant in
Texas, USA

CarbonConversion& Usage2020: World’s largest
bioenergy with carbon
capture and storage(BECCS) pilot facility with
Drax, UK

 MHI Group is global No.1 in volume of CO2 captured

 MHI will expand its product lineup and invest inconversion technologies to expand business
As of 2020, MHI has largest
global installed base market
share in carbon capture

MHI Group:
70%+ share

7

CO2 Capture Vol.*1(GtonCO2/year)

CarbonCaptureExpecting explosive growth

0
2020

2030

2040

2050

*1:Predicted CO2 capture vol. needed to achieve global carbon
net zero at the earliest later than 2050, in accordance with the“1.5 °C Scenario”

Thermal Power
Industrial Use

Cement Plants
Steel Plants

CO2Conversion& Usage

CO2 Capture

Factories & Waste Treatment

Transport

Fuel Synthesis
Valuable Resources
Underground Storage

Commercial Facilities© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

32

1. Energy Transition
Renewables
EMS: Energy Management System

Renewables, energy efficiency

Storage
VPP: Virtual Power Plant

 Increased energy-use efficiency
 Build energy solution provider business by
combining large domestic market share in private
industrial power generation and ENERGY CLOUDEMS Services

Demand prediction
and IPPVPP Services

Aggregate market
transactions and regional
resources

IPP: Independent Power Producer

 Energy Storage BESS (Battery Energy Storage Systems)
US orders totaling 220MW(20MW in South California,

Increased energy-use
efficiency

 Offshore Wind
 Strengthen Partnership with Vestas• Improve competitiveness through integration of
offshore and onshore wind
• Exchange MHI’s shares in MVOW to Vestas
shares, gain seat on Vestas board• Focus on MHI’s areas of strength• Japan, APAC sales JV• Japan production and supply chain
MVOW: MHI Vestas Offshore Wind Expand into New Areas• Explore joint development with Vestas in hydrogen• Project development for offshore wind in Hokkaido
with Copenhagen Infrastructure Partners (CIP)

200MW in Texas)

Roll out to other regions

 EBLOX (triple hybrid stand-alone power
generation system)

Offshore Wind Turbines by MHI Vestas Offshore Wind

Expand renewables-linked
products© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

33

1. Energy Transition

Investments and CO2 reduction track record

 CCUS (carbon recycling) and conversion to hydrogen/ammonia fuels leading to zero CO₂ emissions

Increase efficiency andperformance of existing
thermal power Hydrogen Gas Turbines are catalyst for hydrogen demand（GT400MW＝2 million FCVs）

CCUS

CO2 Reduction
Increase efficiency and performance of current thermal power
Advanced ultrasupercritical
IGCC Development
Boiler Tech
Development
Ammonia, Biomass
Co-firing

CO2 Emissions (%)

Base

JAC class Advanced GT
Development

-20%

CO2
Emissions
-65%

-20%

(Carbon Recycling)

Coal, LNG Power+CCUS

Zero CO2 emission tech
Decarbonization through fuel conversion
Hydrogen GT
Development
ZERO CO2-90% or more
Hydrogen-fired GT

Base*1

Ammonia
GT Development-20%

ZERO CO2(ammonia cracking)

IGCC Development
Ammonia, Biomass
co-firing

50%

-65%
T-Point 2 64% GTCC(2020 operation)

Coal→Highefficiency LNG
Convert to JACclass

0%-90% or less
CCUS adoption

Zero CO2 emissions
Ammonia, hydrogen*1 :Based on CO2 emissions of sub critical pressure coal fired boiler

Technology Timeline© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

2020

2030
34

1. Energy Transition
Reducing CO2
emissions with
nuclear

Reducing CO2 emissions with nuclear

 Drastically reduce CO2 emissions from power generation sector by restarting
existing nuclear power plants and building new ones
 Stable and high volume production of Hydrogen with High Temperature Gas
Cooled Reactors (HTGRs)
Restart existing nuclear
power plants

Zero CO2Power

Maintain readiness new build
nuclear power plants

Zero CO2
Hydrogen

Production of Hydrogenwith HTGRs

CO2 Emissions ※1(%)

Base※2CO2 emissions duringhydrogen production

Hydrogen Related
Facility

Steam Reforming

HTGR

-60%
reduction(from current)↓

ZERO CO2

Electrolysis, Cracking

75%

50%

2020

2030

2040

2050

※1: Predicted CO2 emission reduction if nuclear replaced steam power ※2:Total CO2 emissions in power generation© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

35

2. MHI Group Shared Foundation & Business Areas Accumulate technologies, expertise and personnel cultivated across a broad range ofbusinesses in shared foundation
 Businesses will leverage strengths of the shared foundation to drive growth based on
their respective strategies

Energy & Environment
Drive Energy Transition
Market transformation due
to decarbonization

Infrastructure
Improve quality of life
Dynamic and competitivemarketDeliver fast corporate
decision making

1.

Aircraft, Defense & Space
Build a safer world

Explore and shift into new areasusing combined strength of theGroup

Strengthen sharedfoundation to
support businesses

Group Management

2. Technology

3. People• Mission, vision, values• Strengthen responsibility,
authority and organization• Centralize and develop
technologies and knowhow• Drive forward digitalization• Increase diversity• Increase mobility

Develop and deliver advanced
technologies build on hightrust, safety and quality
Steady, customer focusedmanagement

4. Financial Base
• Acceleration of re-allocation of resource• Improve and maintain financial soundness

Corporate Culture© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

36

3. Energy & Environment
 Balance profitability and growth potential to adjust portfolio and achieve a carbon neutral world by2050
 Maximize global foundation and resources within Mitsubishi Power across MHI Group
Business
Scale

NewAreas
Area
New

Market Trend

Business(5-10 years)

Main Steps
Develop and test high efficiency andalternative fuel converted gas turbines

GTCC

Demand expected toremain stable,
generate new value withhydrogen gas turbines

Upgrade equipment for bolstered servicing(high temperature parts of GTs)
Test autonomous operation at T-Point 2
Increase profitability by reducing costs

Support domestic restarts, fuel cycle

NuclearAero engines
Marine machinery
Compressors
Steam Power
Air Quality Control Systems

Development of next-generation reactors,
current reactors (HTGRs, small size etc.)

Maximize Mitsubishi Power resources
Shift Resources
Increase synergies • Strengthen internal production capability• Strengthen services business• Develop mechanical drive systems in
Oil & Gas
Optimize productivity of boiler factories
amidst large drop off in new builds
Focus on services, expand menu of lowcarbon solutions

FY20

FY23

© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

37

4. Aircraft, Defense & Space Maintain and expand dominant position in Defense & Space business, proactively develop new technologies
 Expect longer-term drop in aircraft market due to COVID-19, strengthen organization for future growthBusinessscale

Business

Market Trend(5-10 years)

Main Steps
Maintain and expand domestic existingand peripheral areas• Start development of next-gen fighter• Move to operations of H3 rocket

Defense &Space

Commercial
Aviation
FY20

Overseas business rollout using joint
development and transfer of domestic
equipment (government-linked)
New tech to build a safer world• Cybersecurity• Unmanned surveillance• Wide-range image data processing
Tier-1 Aerostructures• Personnel saving and automation
technologies to increase profitability• Reorganize base and supply chain• Change processes and increaseautomation
MRO Business• Drive forward PMI, synergies• Prepare for post-COVID growth

FY23© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

38

5. Infrastructure (Mass and Medium Lot Products)
 Recover from COVID crisis quickly and increase investment in growth businesses
Business
Scale

Business

Logistics
Equipment

Market Trend(5-10 years)

Main Steps
Strengthen sales strategy from Japanand US to include Europe and APAC
(Reorganize sales network, launch new
products)
Expand solutions business
Expand B2B business(Regionally matched product lineup)

HVAC
Car Aircon

Expand environmentally friendly products
including natural refrigerant
Build global business around electriccompressors

Engines
Turbochargers
FY20

Cut fixed costs in response to fall off inmarket due to COVID
Invest in growth markets andtechnologies based on current wellmanaged businesses

FY23© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

39

6. Infrastructure (Build To Order Business)
 Respond to change in market environment after COVID, and make structural improvements toincrease profitability
Business
Scale

Business

Market Trend(5-10 years)

Main Steps

Environmental
Equipment

Invest in growth markets andtechnologies based on current wellmanaged businesses

Machinery
Systems

Portfolio management and shift in humanresources

Engineering
Metals Machinery
Commercial Ships
Machine Tools

Organizational and base reorganization
adapting to the market circumstances
Strengthen risk management for large
projects
Shift resources to “Energy Transition”

FY20

FY23

© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

40

7. Merging Non-Financial and Financial – Materiality
 Defining Materiality for MHI Group• Streamlined and analyzed the issues which MHI Group should prioritize to deal with, from both a “Social
perspective” (e.g. recent rising focus on SDGs and climate change), and “Our perspective” (MHI Group’s vision).
Through dialogue with stakeholders, the Materiality that MHI Group should tackle have now been defined• Materiality progress will be monitored by mid- to long-term “targets” and “KPIs” set as milestones, and by linking
business activities and non-financial indexes. In addition, we will communicate with a broad range of stakeholders
our contribution to building a sustainable world
Materiality

Social Issues

SDGs

Business Contribution(Business)
Foundation to
support Business(Corporate)①Provide energy
solutions to enabledecarbonized world Mitigate climate change Reduce GHG emission
 Stable energy/electricity supply

 Improve energy efficiency
 Popularize renewable energy
 Promote 3R*/circulation economy②Transform society
through AI anddigitalization

 Promote AI/digitalized society
 Enhance productivity to react tolabor shortages
 Update outdated facilities③Build a safer and moresecure world National security by defense Adapt to climate change Enhance function/durability of
infrastructure Rationalize infrastructure Enhance transportation
safety/convenience Decarbonize mobility
 Diversify transportation needs
 React to increased logistics④Promote diversity anduplift employee
engagement

 Nurture/secure workforces Respect human rights
 Promote diversity

 Enhance labor productivity
 Labor safety & hygiene Promote health management⑤Enhance Corporate
Governance Corporate governance Comply with law/internationalorder Fair competition/business compliance Grasp overall corporate
risk/management
 Timely disclosure*3R: Reduce, Reuse, Recycle© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

 Interfere with cyber attacks on
industrial systems / IoT
 Prevent pandemics & take appropriate
measures41

8. MHI Group Management KPI - Triple One Proportion (TOP) “TOP” is MHI Group’s overall management Key Performance Index(KPI) to evaluate the balance among
value provision to customers, business foundation, and evaluation from society, aiming the equalbalance -1:1:1- among three management factors: net sales, total assets, and market value.

Social Issue（ESG/SDGs）

Value to customers
through businessactivities Contribute to solve social
issues through businessactivities
 Execute business strategy
 Revenue growth rate

Evaluationfrom society

TOP

Triple One
Proportion

Total AssetBusiness
Foundation

Non-financial index

 Materiality KPI (set ahead)

Financial index

 Profit (ROE/EBITDA etc)
 SAV (ROIC・WACC)

Allocate resources, optimize business portfolio,
Enhance performance of workforce & Balance Sheet© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

42