Mitsubishi Revises Earnings After Overcharging Investigation
Dec 28, 2012
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Mitsubishi Electric Corp. (Tokyo) revised the consolidated earnings forecast for the current fiscal year, originally announced Oct. 31, 2012.
The revision accounts for some business segments - including Home Appliances - that are now expected to have sales below previous forecasts.
But the primary cause for the revision is Mitsubishi's recording of a reserve to enable the company's electronic systems business to pay refunds after the discovery of contractual overcharging.
Mitsubishi Electric said that, in contracts with various Japanese government agencies, it overcharged expenses by shifting work records among different orders.
Contracted agencies included the Ministry of Defense (MOD), the Cabinet Satellite Intelligence Center, the Japan Aerospace Exploration Agency, and the National Institute of Information and Communications Technology. Mitsubishi Electric said that similar practices were identified in relation to separate contracts between four affiliate companies and MOD.
Mitsubishi Electric said that, in its consolidated financial results for the third quarter of the current fiscal year, ending March 31, 2013, it expects to record a reserve that could amount to 77.3 billion yen (approx. US$900 million) as a non-operating expense, for refund of overcharged expenses, related penalties, and interest on certain contracts in its electronics systems business. The amount of the reserve may change depending on further investigations being conducted in cooperation with the involved parties.
Mitsubishi forecasts for fiscal 2013 (April 1, 2012 - March 31, 2013):
* Net sales: 3,520,000 million yen, down from the previous forecast of 3,640,000 million yen. Net sales in fiscal 2012 were 3,639,468 million yen.
* Operating Income: 150,000 million yen, down from the previous forecast of 200,000 million yen. Operating income in fiscal 2012 was 225,444 million yen.
* Net income attributable to Mitsubishi Electric Corp.: 50,000 million yen, down from the previous forecast of 120,000 million yen. Net income attributable to Mitsubishi Electric Corp. in fiscal 2012 was 112,063 million yen.
Mitsubishi Electric's consolidated net sales for fiscal 2013 ending March 31, 2013 are expected to fall below previous forecasts, primarily in its Industrial Automation Systems, Electronic Devices, and Home Appliances segments.
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