Mitsubishi Heavy Industries Ltd. recently reported a decline in quarterly net income, falling short of analysts’ expectations due to a drop in defense orders. Despite this, the company’s revenue continues to rise for its core businesses. The company’s shares experienced a 2.5% decrease following the announcement that net income for the June-September period was ¥44.8 billion, below the average estimate of ¥67.5 billion. However, revenue exceeded predictions, reaching ¥1.19 trillion compared to the expected ¥1.17 trillion.
The company’s shares have seen significant growth this year, with investors showing optimism towards Mitsubishi Heavy’s energy and defense sectors. As part of its mid-term plan, the company aims to increase revenue in these segments by ¥1 trillion by the end of the 2026 fiscal year. Despite the uncertainties caused by currency fluctuations and inflation, strong order intakes provide encouragement for the company’s future performance.
During the first half of the current fiscal year, the aircraft, defense, and space segment experienced a decline of ¥197 billion, primarily due to an unusually high volume of orders in the same period last year. Business profit, excluding manufacturing and sales expenses, rose by 87% to ¥188 billion in the six months leading up to the end of September. Mitsubishi Heavy maintained its full-year profit guidance at ¥350 billion and raised its order intake forecast to ¥6 trillion, a 10% decrease from the previous year.
The defense and space segments of Mitsubishi Heavy saw an increase in orders for gas turbine engines and steel-making machinery, leading to a rise in profits for its energy, defense, and space units. The company was awarded a ¥56 billion contract by Japan’s defense ministry to develop a glide phase interceptor, a missile defense system aimed at countering hypersonic weapons. Additionally, Mitsubishi Heavy holds a significant market share in gas turbine engines globally and is involved in a partnership with Japan, Italy, and the UK to develop a next-generation stealth fighter jet.
Overall, despite the decline in net income for the quarter, Mitsubishi Heavy Industries Ltd. remains optimistic about its future prospects, driven by strong order intakes and growth in key business segments.
