Mitsubishi Electric reports strong Q1 with 91% profit surge

Investing.com -- Mitsubishi Electric (OTC:MIELY) posted a robust start to its fiscal year with first-quarter operating profit reaching ¥112 billion, representing a 91% increase year-over-year and exceeding analyst expectations.

The Q1 FY3/26 results surpassed the street-high estimate of ¥100 billion, despite including one-off gains from various sources. The company reported that actual one-off gains totaled ¥22 billion, comprising ¥15 billion from subsidiary divestitures, ¥5 billion from a settlement package, and ¥2 billion from a land sale.

Even after excluding these one-time factors, the operating profit still outperformed the consensus estimate of ¥81 billion. The strong performance was primarily driven by the Infrastructure projects, Factory Automation Systems, and Air-conditioning business segments.

The Infrastructure segment saw a dramatic 385% year-over-year increase in operating profit to ¥18.1 billion, boosted by high-margin domestic traffic system projects and the settlement package mentioned earlier.

Factory Automation Systems delivered a 235% year-over-year jump in operating profit to ¥17.1 billion. This growth was attributed to increased sales volume, particularly in China, from customers in the smartphone manufacturing sector, machine tool industry, and AI-related semiconductor field. Price increases and cost reduction measures also contributed to this segment’s performance.

The Air-conditioning business posted a 28% year-over-year increase in operating profit to ¥34.2 billion, largely due to rush demand in the United States ahead of a price hike implemented in June. Management noted early signs of recovery in European air conditioner demand, with Air-to-Water heater sales growing 20% year-over-year, marking the first positive growth in seven quarters.

Despite the strong quarterly results, Mitsubishi Electric has maintained its full-year operating profit guidance at ¥430 billion, representing a 10% increase year-over-year. The company’s forecast includes a gross tariff cost of ¥40 billion, which it aims to reduce to ¥30 billion through price increases expected to offset ¥10 billion of the tariff impact.

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