| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥49741.7B | ¥43611.3B | +14.1% |
| Operating Income / Operating Profit | ¥2394.3B | ¥1450.7B | +65.0% |
| Pre-tax Profit | ¥4746.9B | ¥3520.7B | +34.8% |
| Net Income / Net Profit | ¥3459.4B | ¥2620.0B | +32.0% |
| ROE | 10.7% | 10.6% | - |
For the fiscal year ended March 2026, Mitsubishi Heavy Industries consolidated results reached Revenue ¥4兆9,741B (YoY +¥6,130B +14.1%), Operating Income ¥2,394B (YoY +¥944B +65.0%), Ordinary Income ¥2,935B (YoY +¥1,062B +56.7%), and Net Income attributable to owners of the parent ¥3,321B (YoY +¥867B +35.3%), all at record highs. Revenue increased for the fourth consecutive year, led by the Energy Business—centered on GTCC and Nuclear—and the Aerospace, Defense & Space Business, including Australian frigates. Operating margin improved substantially to 4.8% (up +1.5pt from 3.3% a year earlier), and ROE rose to 12.2% (prior year 10.7%). Order backlog strengthened to ¥13.2 trillion and contract liability structure increased, Operating Cash Flow was ¥9,426B—2.8x Net Income—and Free Cash Flow was ¥8,934B, comfortably exceeding dividends and capital expenditure and demonstrating robust cash generation.
[Revenue] Revenue rose to ¥4兆9,741B (+14.1% YoY), marking a fourth consecutive year of revenue growth. Core Energy recorded ¥2兆539B (+13.9%), and Aerospace, Defense & Space recorded ¥1兆3,929B (+35.3%), driving double-digit growth. GTCC benefited from orders and project progress for 35 large gas turbines, pushing order intake to a record ¥2兆6,526B. Nuclear secured orders totaling ¥5,406B across light-water reactors, fuel cycle and innovative reactors. Defense revenue expanded sharply (+38%) driven by large projects such as Australian frigates. Plant & Infrastructure was ¥8,147B (+1.1%) with modest increase, while Logistics, Cold & Drive Systems was ¥6,249B (▲1.8%)—profitability improved in engines and turbochargers, but lower unit sales weighed on revenue. FX was a tailwind—USD average ¥150.4, EUR average ¥173.1—boosting revenue in high overseas-exposure segments (Aerospace, Defense & Space and Energy). Due to reclassification of discontinued operations (former Mitsubishi Logisnext), prior-year figures were restated, and on a continuing-operations basis growth remained double-digit. Contract liabilities rose significantly to ¥2兆1,619B (YoY +¥7,179B +49.7%), confirming the build-up of future revenue under advance payments.
[Profitability] Cost of sales amounted to ¥3兆8,915B, improving gross margin to 21.8% (up +1.8pt from 20.0% last year). SG&A totaled ¥6,328B (from ¥5,841B prior year, +8.4%), below revenue growth (+14.1%), resulting in operating leverage and Operating Income of ¥2,394B (+65.0%), with operating margin improving to 4.8% (up +1.5pt from 3.3%). By segment, Energy recorded business profit ¥2,672B (margin 13.0%) as the largest contributor; Aerospace, Defense & Space recorded ¥1,515B (margin 10.9%); Plant & Infrastructure ¥841B (margin 10.3%) with higher profitability. Logistics, Cold & Drive Systems generated ¥330B (margin 5.3%) where profitability improvement remains a challenge. Non-operating income increased significantly to ¥594B (from ¥128B prior year, +4.7x), and equity-method investment income turned positive at ¥167B (from ▲¥26B), lifting the bottom line. One-off items included construction losses on steam power projects of ▲¥300B and goodwill impairment related to power system solutions of ▲¥300B; notwithstanding, Ordinary Income reached ¥2,935B (+56.7%). Losses from discontinued operations were ▲¥124B (prior year profit ¥163B), affected by reclassification and sale-preparation costs related to former Mitsubishi Logisnext. Profit before tax was ¥4,747B (+34.8%), income tax expense was ¥1,163B (effective tax rate 24.5%), and Net Income attributable to owners of the parent was ¥3,321B (+35.3%). The divergence between Ordinary Income and Net Income is approximately ▲30%, mainly due to discontinued operations losses and tax burden. In conclusion, Mitsubishi Heavy Industries achieved higher revenue and profit, with a significant improvement in profit structure driven by expansion of high-margin segments and operating leverage.
Reportable segments are Energy; Plant & Infrastructure; Logistics, Cold & Drive Systems; and Aerospace, Defense & Space. The core business is Energy, with Revenue ¥2兆540B (41.3% of total) and business profit ¥2,672B (49.9% of segment total ¥5,359B), the largest earner. Year-on-year, Energy revenue +13.9% and business profit +30.1% drove higher revenue and profit, supported by orders/progress of 35 GTCC large gas turbines and Nuclear orders of ¥5,406B, as well as favorable FX. Aerospace, Defense & Space delivered Revenue ¥1兆3,929B (+35.3%) and business profit ¥1,515B (+51.6%), rapidly growing with recognition of large orders such as Australian frigates. Plant & Infrastructure Revenue was ¥8,148B (+1.1%) and business profit ¥841B (+41.1%); profit margin improved to 10.3% (up +3.3pt from 7.0%) aided by improved profitability in steelmaking machinery. Logistics, Cold & Drive Systems Revenue was ¥6,249B (▲1.8%) and business profit ¥330B (+61.4%); engine and turbocharger profitability improved but lower sales volumes constrained revenue. While Energy and Aerospace, Defense & Space achieved profit margins above 10%, Logistics, Cold & Drive Systems remained low at 5.3%; mix improvement contributed to higher consolidated operating margin.
ROE was 12.2% (prior year 10.7%), explainable as Net Profit Margin 6.7% × Total Asset Turnover 0.601 × Financial Leverage 2.56. Prior year Net Profit Margin was about 5.6%, Total Asset Turnover about 0.66 and Leverage about 2.7, so the main driver of ROE improvement was higher Net Profit Margin (Operating Margin +1.5pt, Non-operating income +¥466B), partially offset by lower asset turnover. Operating margin was 4.8% (up +1.5pt from 3.3%), driven by expanding high-margin Energy and Aerospace, Defense & Space. Operating Cash Flow/Net Income was 2.84x, indicating very high quality; FCF was ¥8,934B, substantially exceeding dividends ¥804B and capital expenditure ¥1,811B combined (¥2,616B). Capex/Depreciation was 0.86x, indicating new investments are within depreciation and at a maintenance level. Equity Ratio was 37.3% (up +2.1pt from 35.2% prior year), Current Ratio about 128% (Current Assets ¥5兆4,404B / Current Liabilities ¥4兆2,612B), indicating sound financial health. D/E was approx. 1.56x, and Interest-bearing Debt/EBITDA (adding back depreciation etc. ¥2,112B to approximate EBITDA ¥4,506B) was about 1.9x—within investment-grade range. Interest Coverage was about 20.7x (EBIT ¥2,394B / Interest Expense ¥115B), indicating a very light debt burden.
Operating Cash Flow was ¥9,426B (from ¥5,305B prior year, +77.7%), or 2.84x Net Income, indicating very high quality. The main driver was an increase in contract liabilities of +¥6,635B, with advance payments for large GTCC and defense projects strongly increasing cash inflows. Conversely, increases in trade receivables and contract assets (total ▲¥4,101B) were cash outflows, leaving working capital effects roughly offsetting. Operating Cash Flow subtotal, adding depreciation and amortization ¥2,112B to Pre-tax Profit ¥4,747B, was ¥9,594B, complemented by interest received ¥140B and dividends received ¥258B. Investing Cash Flow was ▲¥492B; principal outflow was capital expenditures ▲¥1,811B, offset by proceeds from sales/redemptions of investment securities +¥1,016B and net receipts from derivative transactions +¥554B. Free Cash Flow was ¥8,934B (from ¥3,427B prior year, +161%), substantially improved and 3.4x the sum of dividends paid ▲¥805B and capex ▲¥1,811B (total ¥2,616B). Financing Cash Flow was ▲¥2,746B, driven by dividends ▲¥805B, long-term borrowings repayments ▲¥665B, and bond redemptions ▲¥350B. Receipts from receivables securitization and similar items +¥852B partly offset borrowings repayment. FX translation effects +¥795B contributed, bringing Cash and Cash Equivalents to ¥1兆3,349B (from ¥6,578B prior year, +103%). Operating Cash Flow/EBITDA was about 2.1x, indicating excellent cash conversion. Overall cash-generation assessment is "extremely strong."
Ordinary Income ¥2,935B versus Net Income attributable to owners of the parent ¥3,321B shows Net Income exceeding Ordinary Income. The primary factors are discontinued operations loss ▲¥124B and income tax expense ¥1,163B (effective tax rate 24.5%); the divergence between Ordinary Income and Net Income reflects one-off items and tax effects. Non-operating income ¥594B (1.2% of Revenue) was mainly driven by expanded financial income, with foreign exchange gains and gains on valuation of investment securities contributing. Equity-method investment income ¥167B (from ▲¥26B prior year) also supported Ordinary Income. One-off items—construction loss on steam power projects ▲¥300B, goodwill impairment for power system solutions ▲¥300B, and discontinued operations loss ▲¥124B—are viewed as transient. Accrual quality is high: Operating Cash Flow is 2.84x Net Income. Comprehensive income was ¥8,389B, substantially exceeding Net Income ¥3,459B, driven by Other Comprehensive Income +¥4,930B (remeasurement gain on defined benefit plans +¥2,912B, foreign currency translation adjustments +¥1,043B, FVTOCI financial asset valuation gains +¥805B). These are mainly valuation gains and thus should be distinguished from recurring operating performance, but the remeasurement gain on retirement benefit obligations indicates improved financial health. Overall, earnings quality is high, underpinned by cash and a sustainable profit structure.
Full-year forecast for fiscal 2026 projects Revenue ¥5兆4,000B (YoY +8.6%), Net Income attributable to owners of the parent ¥3,800B (+14.4%), EPS ¥113.09, and dividend ¥14 per share. Progress against current-year actuals stands at Revenue 92.1% and Net Income 87.4%; for the 9-month cumulative (Q3), this significantly exceeds the standard 75% pacing, implying fourth-quarter catch-up and backlog recognition. No revision to guidance has been disclosed; initial forecasts remain unchanged. The higher-than-standard progress reflects build-up of advance payments (contract liabilities ¥2兆1,619B) which improved visibility of future revenue and concentrated revenue catch-up in Q4. Order backlog is ¥13.2 trillion—equivalent to approximately 2.4 years of revenue—and backlog/Revenue ratio is about 2.4x, providing very strong underpinning for future revenue. Fiscal 2026 targets business profit ¥5,400B (margin 10.0%); assumptions include Energy orders ¥3.45 trillion / Revenue ¥2.2 trillion / business profit ¥3,400B, and Aerospace, Defense & Space orders ¥1.65 trillion / Revenue ¥1.5 trillion / business profit ¥1,700B. These assume strengthened GTCC production capacity, expanded Nuclear orders, and increased defense resources. FX assumptions are ¥150/USD and ¥180/EUR, and geopolitical risks in the Middle East are not incorporated.
Dividends were Interim ¥12 and Year-end ¥13 for a total ¥25 per share (up ¥2 from prior year ¥23). Payout Ratio was 25.4% (Total dividends ¥844B against Net Income ¥3,321B). The dividend-only return ratio of 25.4% is at a sustainable level; dividend coverage versus FCF ¥8,934B is about 10.6x, indicating substantial capacity. Share buybacks were limited (Financing Cash Flow impact ▲¥1.8B), leaving Total Return Ratio at about 25.4%. With Cash & Cash Equivalents ¥1兆3,349B and strong Operating Cash Flow, flexibility for dividend increases and buybacks is high. Guidance for fiscal 2026 dividend is ¥14 per share (Interim ¥7, Year-end ¥7); given current share price assumptions (not disclosed), forecast dividend yield cannot be calculated. The company maintains a policy balancing growth investment and shareholder returns, sustaining a dividend uptrend (prior year ¥23 → current ¥25 → FY2026 forecast ¥14 may contain a textual inconsistency; ¥14 may be a per-half or other notation).
[Short-term]
[Long-term]
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| ROE | 12.2% | 6.3% (3.2%–9.9%) | +5.9pt |
| Operating Margin | 4.8% | 7.8% (4.6%–12.3%) | -2.9pt |
| Net Profit Margin | 7.0% | 5.2% (2.3%–8.2%) | +1.8pt |
ROE exceeds the industry median by +5.9pt and sits in the top 25% range, whereas Operating Margin is ▲2.9pt below the median and under the industry average. Net Profit Margin exceeds the median by +1.8pt, with financial income and equity-method gains boosting the bottom line.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 14.1% | 3.7% (-0.4%–9.3%) | +10.4pt |
Revenue growth outperforms the industry median by +10.4pt and sits in the top 10% range. Large orders in GTCC, Nuclear and Defense are driving standout growth within the sector.
※ Source: Company aggregation
Profitability and execution risk for large projects: For fixed-price GTCC and defense contracts, cost overruns or schedule delays could erode profitability and require provisions. The steam power project loss of ▲¥300B is a precedent, and continued strict execution management of large projects is a critical issue. Ensuring that the ¥13.2 trillion order backlog converts to revenue reliably requires stringent supply-chain management and adherence to quality requirements.
Structural working-capital efficiency challenges: Trade receivables + contract assets increased to ¥2兆1,278B, with DSO about 81 days and DIO about 98 days, indicating still-heavy working-capital turnover. While contract liabilities +¥6,635B boosted Operating Cash Flow, a reversal could raise CF volatility. CCC (cash conversion cycle) improved to about 19 days, but actual reductions in inventories and receivables remain limited; continued efforts are needed to sustain improvements in cash conversion.
External environment volatility: FX is assumed at ¥150/USD; deviations (yen appreciation/depreciation) can affect revenue, profit and financial income. Middle East developments are not factored into near-term outlooks, and fluid geopolitical risk can affect defense and energy projects. Fuel prices and changes in energy mix can influence GTCC/Nuclear demand cycles and long-term backlog profitability. In Aerospace, Defense & Space, supply-chain constraints and stricter certification/quality requirements may affect schedules and costs.
Transition toward achieving 10% business-profit margin: FY2026 target is business profit ¥5,400B (margin 10.0%), planning a +25% increase from prior-year ¥4,322B. Expansion of high-margin Energy (13.0%) and Aerospace, Defense & Space (10.9%), along with a rebound from goodwill impairments, are expected to contribute, making an operating margin above 5% conceivable. Order backlog ¥13.2 trillion and contract liabilities ¥2兆1,619B are leading indicators of future revenue, supporting continued mid-term profit-structure improvement.
Strong cash generation and flexible capital allocation: FCF ¥8,934B is 3.4x the sum of dividends and capex (¥2,616B), and dividend payout ratio 25% leaves substantial capacity. High levels of cash ¥1兆3,349B and Operating Cash Flow ¥9,426B enable balancing growth investment (GTCC production ramp-up, Nuclear and defense resource enhancements) with additional shareholder returns (dividend increases and buybacks). If working-capital efficiency improves and contract liabilities are managed properly post-FY2026, FCF margin could further improve.
Reliable execution of ¥13.2 trillion order backlog: Backlog/Revenue ratio is about 2.4x. GTCC order intake was a record ¥2兆6,526B, and Defense secured backlog exceeding ¥4 trillion including Australian frigates, providing high medium- to long-term revenue visibility. Nuclear is expanding toward an annual business scale of ¥360–400B, establishing itself as a pillar alongside light-water reactors, fuel cycle and innovative reactors. Execution risk remains—profitability management of large projects and supply-chain responses are key monitoring points to prevent recurrence of construction losses or goodwill impairments and to improve working-capital efficiency structurally.
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