MHI Q1 FY2027: Revenue Surges 15%, Business Profit Soars 65%

MHI posted consolidated revenue of ¥1,194.2 billion in the first quarter, up 15.5% from a year earlier. Business profit surged 65.1% to ¥159.6 billion, while net income nearly doubled, climbing 97.4% to ¥134.6 billion. All segments achieved revenue growth, with the Energy segment providing the biggest lift.

The strong start puts MHI well on track to exceed its full-year forecasts, which were left unchanged: revenue of ¥5.4 trillion, business profit of ¥540 billion, and net income of ¥380 billion. First-quarter progress already reached 22.1% of the revenue target and 29.6% of the business profit target, raising expectations for an upward revision. The quarter also benefited from the completed sale of Mitsubishi Logisnext, which generated a one-time gain and boosted cash, though core operational momentum was the dominant driver.

MHI reorganised its reporting segments this fiscal year into four divisions: Energy, Plant & Infrastructure, Industrial Solutions, and Aviation, Defense & Space. All posted year-on-year revenue growth, with Energy driving the bulk of the profit increase.

Energy revenue climbed 27.0% to ¥535.1 billion, and segment profit soared 79.8% to ¥101.3 billion, the highest growth rate among all segments. Progress on large gas turbine and nuclear projects, coupled with a weaker yen and cost reductions, lifted margins. The operating margin reached 18.9%.

Plant & Infrastructure saw a slight 1.5% dip in revenue to ¥192.0 billion, as deliveries of steelmaking machinery and commercial ships were front-loaded in the prior year. However, segment profit rose 17.1% to ¥21.7 billion thanks to improved project profitability and a better mix.

Industrial Solutions revenue grew 14.9% to ¥175.9 billion, and segment profit surged 146.3% to ¥9.9 billion, driven by cold thermal products, engines, and data-center energy management. The margin jumped to 5.6% from 2.6% a year earlier.

Aviation, Defense & Space revenue rose 9.8% to ¥285.9 billion, and segment profit increased 12.6% to ¥32.4 billion, supported by steady defense production and recovering commercial aircraft parts shipments. The margin held firm at 11.3%.

Total assets at the end of the quarter stood at ¥8,151.3 billion, down ¥118.3 billion from the previous fiscal year-end, mainly due to the deconsolidation of Mitsubishi Logisnext. However, cash and cash equivalents jumped ¥349.2 billion to ¥1,684.0 billion. Operating cash flow was a robust ¥284.5 billion inflow, reflecting strong earnings and an increase in contract liabilities.

Investing activities generated a ¥106.9 billion inflow, including proceeds from the Logisnext sale. Financing activities recorded a ¥82.1 billion outflow for dividends and debt repayments, but overall cash increased substantially.

MHI plans to raise its annual dividend by ¥4 to ¥29 per share (interim ¥14, year-end ¥15). No share buyback was announced, but the strong balance sheet leaves ample room for additional shareholder returns. The equity ratio attributable to parent company owners rose 1.6 percentage points to 38.9%.

Management left its full-year forecasts unchanged from April: revenue of ¥5.4 trillion (up 8.6% year on year), business profit of ¥540 billion (up 24.9%), and net income attributable to parent shareholders of ¥380 billion (up 14.4%).

With first-quarter revenue progress at 22.1% and business profit progress at 29.6%, the company is off to a faster start than usual. The Energy segment's order backlog is at a record high, driven by robust demand for gas turbines, pointing to potential upward revisions in the first half or full year. MHI's forecast assumes a U.S. dollar rate of ¥150; the recent weaker yen provides a tailwind.

The sale of Mitsubishi Logisnext (now Logisnext) shares, announced in September 2025, closed on May 1, 2026, during the first quarter.

The transaction contributed ¥6.5 billion in quarterly profit from discontinued operations and added ¥138.4 billion to cash and cash equivalents. A share transfer loss of ¥32.9 billion was booked, but offset by foreign currency translation gains and tax effects, resulting in a limited net impact on earnings.

With the logistics equipment business removed from consolidation, MHI can now concentrate management resources on higher-return core operations in energy, defense, and aerospace.

The earnings report flags several factors that could affect performance: economic conditions, exchange rates (especially the dollar-yen rate), and stock market fluctuations.

• Foreign exchange risk: A high proportion of overseas revenue means a sharp yen appreciation could squeeze earnings. The full-year assumption is ¥150 to the dollar; a move toward a stronger yen would dent results.
• Order fluctuation risk: Large power plant and defense contracts can cause significant year-to-year swings in order intake and profit recognition.
• Geopolitical risk: While rising global defense budgets benefit MHI, supply chain disruptions and high materials costs pose ongoing headwinds.
• Quality risk: The aviation and defense businesses require strict quality control; any defects could lead to heavy compensation and reputational damage.

MHI is mitigating these risks by building its order backlog, tightening cost management, and using long-term contracts to dampen currency impacts.