Mitsubishi Electric Corp.

S&P Global Ratings acknowledges a high degree of uncertainty about the rate of spread and peak of the coronavirus outbreak. Some government authorities estimate the pandemic will peak about midyear, and we are using this assumption in assessing the economic and credit implications. We believe the measures adopted to contain COVID-19 have pushed the global economy into recession (see our macroeconomic and credit updates here: www.spglobal.com/ratings). As the situation evolves, we will update our assumptions and estimates accordingly. The stable outlook reflects our view that Mitsubishi Electric will maintain its very sound financial position for the ratings, supported by conservative financial management over the next one to two years. It also reflects our view that the company's business portfolio is

...Mitsubishi Electric Corp. is likely to maintain stable profitability, with its well-diversified business portfolio absorbing the earnings volatility of its factory automation business.We expect sluggish growth in earnings in the company's electronic devices and mainstay factory automation systems businesses over the next year. The businesses are highly correlated to the global economy, which is under strong downward pressure amid the COVID-19 outbreak. However, profitability has steadily improved in businesses such as electric power equipment, elevators, and air conditioning equipment, which we believe have different cyclical patterns with diverse end markets, as the company's growth strategy has progressed. We therefore expect its EBITDA margin to remain at around 11%, although this is at the low end of the range for the rating, over the coming year or two (see chart 1)....

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