Mitsubishi Heavy Industries : Presentation Materials with Summary (1.68 MB)

2024 Medium-Term Business Plan

(FY2024 - FY2026)

May 28, 2024

Seiji Izumisawa, President & CEO

Mitsubishi Heavy Industries, Ltd.

© Mitsubishi Heavy Industries, Ltd. All Rights Reserved.

During this presentation, I will outline our 2024 Medium-Term Business Plan (MTBP).

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Table of Contents

1. Mission and Vision for Society
2. Review of 2021 MTBP*
3. MHI's Operating Environment and Expected Roles
4. Strategy and Targets
5. Key Initiatives
6. Strengthen Technologies and Human Capital
7. Promote MISSION NET ZERO

© Mitsubishi Heavy Industries, Ltd. All Rights Reserved.

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*Medium-Term Business Plan

Today's presentation will cover the topics listed in the table of contents.

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1. Mission and Vision for Society

First, let me explain MHI's mission and our vision for society.

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1. Mission and Vision for Society

Our Mission

Combine cutting-edge technology with many years of expertise to provide

solutions to the evolving challenges facing the world while enriching people's lives

Our Vision for Society

Safety

Security Comfort

Safe, Secure, and Comfortable World

• Provide realistic solutions tailored to local communities and customers to solve societal issues
• Starting with manufacturing, expand our scope of work both up- and down-stream within value chains, form partnerships, and become a hub for ecosystems to change society

Succeed in the global competitive landscape into the future

by realizing our vision for society

© Mitsubishi Heavy Industries, Ltd. All Rights Reserved.

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Our mission is to combine cutting-edge technology with many years of expertise to provide solutions to the evolving challenges facing the world while enriching people's lives. Our goal is to realize MISSION NET ZERO and a safe, secure, and comfortable world.

As the issues facing the world become more complex, we will provide realistic solutions to these problems tailored to local communities and customers.

In doing so, starting with manufacturing, we plan to expand our scope of work both up- and down-stream within value chains. We will form strategic partnerships and become a hub for ecosystems to change society.

Through these activities, we aim to succeed in the global competitive landscape.

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2. Review of 2021 MTBP

Before discussing the 2024 MTBP, allow me to provide a review of the 2021 MTBP.

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2. Review of 2021 MTBP

• Despite uncertainty in our operating environment, strengthened profitability, achieving record profits and building strong business and financial foundations
• Through the development of future growth areas, identified commercial opportunities in hydrogen, ammonia, CCUS,1 electrification, and data centers.

	2018 MTBP				2021 MTBP
	 Expand to ¥5 tr			 Strengthen
	 Strengthen Financial
				Profitability
	Foundation
	 Continue Business			 Develop Future
	Structure Reforms				Growth Areas
Revenue			Business Profit2			Net Interest-Bearing Debt
(trillion yen)				(billion yen)			(billion yen)

	CAGR3 8%4		4.7
						200.5
4.1
		3.7						4.9%
FY18	FY19	FY20	FY21	FY22	FY23	FY18

5x4

282.5

660.2 55% reduction4

6.1%

54.0

381.9

297.7

1.5%

FY20

FY21

FY22

FY23

FY18

FY19

FY20

FY21

FY22

FY23

© Mitsubishi Heavy Industries, Ltd. All Rights Reserved.

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1 Carbon dioxide Capture, Utilization and Storage 2 Profit from Business Activities 3 Compound annual growth rate 4 vs. FY20 levels

During the 2021 MTBP, we worked to strengthen profitability and develop future growth areas. This was because, at the start of the 2021 MTBP, our operating environment was uncertain, and we decided to focus on shoring up current levels of profitability and strengthening our business foundation, rather than pursuing revenue growth.

As a result, we achieved record profits and built strong business and financial foundations in FY2023.

As for the development of future growth areas, we identified commercial opportunities on the energy supply side, such as hydrogen, ammonia, and carbon capture, and in the electrification and data center areas on the energy demand side.

The graphs on the bottom half of this page show trends in revenue, business profit, and net interest-bearing debt during the 2018 MTBP and 2021 MTBP periods. Revenue and business profit both increased significantly. Accordingly, we were able to significantly reduce net interest-bearing debt.

Based on these solid business and financial foundations, we will begin work on the 2024 MTBP.

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3. MHI's Operating Environment and

Expected Roles

I will now explain our assumptions regarding MHI's operating environment and our expected roles during the 2024 MTBP.

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3. MHI's Operating Environment and Expected Roles

• Contribute to solving the increasingly complex issues society faces as our operating environment changes

Operating Environment

Rising demand for diverse and stable

decarbonized power sources

Expansion of power demand from spread of

generative AI and electrification

Growing momentum to strengthen

economic security

Labor shortages in advanced economies

Increasing geopolitical risks

Expected Roles

Contribute to decarbonization

• Energy supply side
• Provide stable supply of energy
• Realize energy transitions tailored to local conditions
• Energy demand side
• Improve efficiency and automate with digital technologies
• Launch environmentally conscious products on the energy demand side

Contribute to national security

• Strengthen national security with comprehensive approach

© Mitsubishi Heavy Industries, Ltd. All Rights Reserved.

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MHI faces a variety of situations in our operating environment, including those related to energy, economic security, and geopolitical risks. Under such circumstances, MHI Group will play two major roles in contributing to the resolution of societal challenges.

First, we will contribute to the realization of a Carbon Neutral world. This will be addressed on both the energy supply and demand sides. We will also contribute to national security.

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4. Strategy and Targets

Next, allow me to outline our strategy and targets for the 2024 MTBP.

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4. Strategy and Targets

• Strengthen portfolio management leveraging business and financial foundations established during the 2021 MTBP
• Strengthen the technologies and human capital that support these efforts, and promote MISSION NET ZERO

Balance business growth with further profitability improvements

Strengthen Portfolio

Management

Strengthen Technologies

and Human Capital

Promote

MISSION NET ZERO

	¥4.6 tr 20%	≥¥5.7 tr
Revenue
	FY23	FY26
	60%	≥¥450.0 bn
Business	¥282.5 bn
	≥8%
Profit	6%
	FY23	FY26
		≥12%
ROE	11%
	FY23	FY26

Exchange rates assumptions: ¥140/USD, ¥150/EUR

© Mitsubishi Heavy Industries, Ltd. All Rights Reserved.

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During the 2024 MTBP, we will further strengthen and evolve portfolio management, leveraging the business and financial foundations established during the 2024 MTBP.

In other words, during the 2024 MTBP, we will develop our business while balancing business growth with further profitability improvements. We aim to achieve revenue of at least ¥5.7 trillion, an increase of 20% over FY2023 levels, and business profit of at least ¥450 billion, an increase of 60%, resulting in an ROE of 12% or higher.

In addition to strengthening the technologies and human capital that will underpin these efforts, we will also promote MISSION NET ZERO.

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