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Mitsubishi’s net hit by defense gouging

Kyodo

Mitsubishi Electric Corp. said Monday its group net profit in the April-December period plunged 40.1 percent from a year ago to ¥49.14 billion due in part to refunds made to the Defense Ministry and others for purposely overcharging on defense contracts.

Mitsubishi Electric, one of Japan’s leading defense contractors, said it booked refunds of ¥75.7 billion in nonoperating expenses. It said its group operating profit fell 30.0 percent to ¥113.23 billion on sales of ¥2.51 trillion, down 2.1 percent.

The electrical machinery manufacturer said sales of its mainstay factory automation systems business fell due to lower capital spending for semiconductor- and flat-panel display-related investments in China, South Korea and Taiwan.

Sales of home appliances also declined, partly because of slumping demand for liquid crystal display TVs and Blu-ray disc recorders in Japan, it said.

Meanwhile, its automotive equipment business fared well, bolstered by a recovery in the North American car market and subsidies for eco-friendly cars in Japan that more than offset sluggish sales in Europe, it said.

The company left its earnings forecast for the full year through March unchanged, expecting a group net profit of ¥50 billion, down 55.4 percent from the previous year, and an operating profit of ¥150 billion, down 33.5 percent. It expects to post consolidated sales of ¥3.52 trillion, down 3.3 percent.