Mitsubishi Electric plans to determine whether to exit struggling business units with combined annual sales of ¥800 billion ($5.5 billion) this fiscal year, as the Japanese industrial conglomerate seeks to redirect capital toward higher-growth investments.
The potential withdrawal would primarily affect auto equipment and factory automation operations, President Kei Uruma said during a strategy briefing Wednesday. The company aims to fundamentally restructure its business portfolio to enhance corporate value.
The timing appears counterintuitive given that factory automation has been among Mitsubishi Electric’s most profitable segments, generating operating margins that rival its air conditioning division despite lower revenues. However, the business faces headwinds from economic slowdown in China, a crucial market, and disappointing electric vehicle sales globally.
Auto equipment operations have struggled with rising material costs and logistics expenses. The company already spun off this division into Mitsubishi Electric Mobility Corporation in April 2024, signaling potential for further restructuring.
Despite posting record revenue of ¥5.5 trillion for fiscal 2025, Mitsubishi Electric forecasts a revenue decline to ¥5.4 trillion for fiscal 2026, partly due to yen strength. The company recently announced a ¥100 billion share repurchase program while pursuing strategic focus on semiconductors, air conditioning, and elevators where it maintains competitive advantages.
