2021 Medium-Term Business Plan (MTBP) (FY2021

2021 Medium-Term Business Plan (MTBP) (FY2021 – 2023)

October 30, 2020 Seiji Izumisawa, President and CEO

 Issuing 2021 MTBP six months early • Due to the COVID-19 impact, adverse changes in the thermal power business environment, and a strategic change in commercial aviation, we have decided to make a full update to 2018 MTBP with the publishing of 2021 MTBP  Main points of 2021 MTBP • Rapidly return to and strengthen profitability

• Clear direction for strong growth going forward  Return to and strengthen profitability • In addition to recovering from COVID-19 impact, address challenged businesses, decrease SG&A and achieve 7% business profit margin in FY2023  Opening up growth areas • Focus primarily on Energy Transition and New Mobility & Logistics, invest 180 billion yen during 2021 MTBP into these areas, expand new businesses to 1 trillion yen by FY2030

Ⅰ. MHI Group Vision Ⅱ. 2021 MTBP Positioning & Targets Ⅲ. Measures for Commercial Aviation Systems Ⅳ. Plan to Strengthen Profitability Ⅴ. Developing High Growth Businesses VI. Summary

Integrate cutting-edge technology into expertise built up over many years to provide solutions to some of the world’s most pressing issues and provide better lives

MHI Group’s Key Core strengths Global Issues & Trends Focal Themes

 Infrastructure systems that  Realize a carbon neutral support our modern lives Climate Change world • Upgrading of current  Defense products that protect Shrinking working infrastructure us on land, at sea and in the air • Decarbonization and population diversification of fuels • CO2 conversion and usage  Space and deep sea systems Higher volume and • Air conditioning and chilling with that open up unknown parts of complexity in logistics natural refrigerant our world and universe  New types of threats like Improve quality of life  • Smart and networked machinery High performance, high cyber attacks reliability products systems • Automation of logistics • High temperature, high speed, Electrification, intelligence • Electrified and intelligent mobility high pressure and industry • Complex and large-scale and digitalization structures and systems  Build a safer world • Optimized control of large- Shift in value from • Integrated defense scale systems ownership to usage • Cybersecurity

Drastically increase our corporate value through the primary growth engines of Energy Transition and New Mobility & Logistics while managing our portfolio

Business Areas & Scale (in hundred million yen) Hydrogen, CCUS etc. Energy & Environment 3,000 Work toward a carbon neutral 2050, by driving forward the energy transition through collaboration across internal disciplines, and externally

Energy & Infrastructure Environment New Areas Combine strengths in existing businesses and 7,000 intelligent systems to expand our business into high growth areas like mobility and logistics, e.g. CASE, cold chain and electric components Infrastructure Aircraft, Defense & Space Aircraft and Space: Expand business areas Defense: Integrated defense systems across land, sea, Aircraft, Defense & Space air and space, unmanned and minimally manned technologies, and cybersecurity FY20 FY23 FY30 CCUS: Carbon dioxide Capture, Utilization and Storage CASE: Connected, Autonomous, Shared and Electric

Rapid transition to leap forward in 2024 MTBP and path to achieving TOP

st 1 half of 2010s 2015&18MTBP 2021MTBP（FY21– 23） 2024MTBP   Revenue growth to 5 Business scale  Grow new expansion trillion yen  Return to & strengthen businesses through M&As  Strengthen financial profitability foundation areas  Structural   Ongoing structural Accelerate growth  Achieve TOP reforms reforms

 Return to profitability  Accelerate growth  Strengthen shared （Business profit margin 7%） • Drastic resource re-allocation foundation • Reduce fixed costs, improve • Strengthen investment into • Strengthen foundational productivity growth areas core technologies • Increase after-sales service ratio • Strengthen cooperation within • Digitalization • Reduce SG&A and headcount and outside the Group 4.70 4.49 4.28 (In trillion yen) 4.17 3.87 3.85 Challenges we are facing 3.42 4.05 4.09 4.08 4.04 3.50 Order intake 3.19 3.99 3.91 3.00 3.03 3.70 3.35 Decline in order intake since FY14 Revenue 2.82 → Accelerate growth 12.2% 12.5% 2.90 2.82 EBITDA margin 10.8% 10.2% 9.7% 9.7% Lower profit since FY15 (excluding SpaceJet, etc.) → Return to and improve 8.1% 8.5% 8.3% 8.2% profitability 6.8% 1.33 1.16 1.03 1.05 0.96 0.98 0.93 0.81 0.95 Reduce interest-bearing debt Interest-bearing 0.67 0.60 → Maintain financial stability debt FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 TOP: Triple One Proportion, ratio among three management factors: net sales, total assets, EBITDA: Earnings Before Interest, Tax, Depreciation and Amortization SG&A: Selling, General and Administrative Expenses IFRS IFRS IFRS IFRS and market value. © MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved. 8 2021 MTBP Targets – FY2023 Targets

FY2023 Targets

Business Profit Margin 7% Profitability ROE 12%

Create new businesses worth 100 billion yen in revenue through strengthened investment in growth → Expand to 1 trillion yen in revenue in FY30 Growth Primary Energy New Mobility investment Transition & Logistics areas

Balance Sheet Total assets turnover 0.9 Financial Stability Maintain interest-bearing debt level

Dividend Record-high level of dividend per share

ROE: Return On Equity

(In trillion yen)

FY2018 FY2020 FY2023 Revenue 4.1 3.7 4.0 Business profit margin 5% 1% 7% ROE 7% 2% 12% Total Assets 5.1 4.8 4.5

Interest-bearing debt 0.67 0.95 0.9 Equity 1.7 1.3 1.5 D/E ratio 0.4 0.8 0.6 Equity ratio 34% 25% 33%

Dividend per share 150 yen 75 yen 160 yen

 Strengthen operating cash flow by improving profitability, continue to monetize through asset management  Shift investment away from SpaceJet and into priority growth areas (energy transition, new mobility & logistics)

2018 MTBP (Total 3 Years) 2021 MTBP (Total 3 Years) Cash-in Cash-out Cash-in Cash-out

SpaceJet 200 SpaceJet 3,700 Growth Areas 1,800 Regular Regular operating Growth Areas 800 operating Expand 2,000 Cash flow Cash flow 7,200 Expand 9,000 1,600 Profit-focused, others Profit-focused, 2,800 Asset others management, etc. 3,100 2,500 Debt repayment 900

Debt financing 1,400 Dividend 1,300 Asset management, etc. Dividend 1,400 Unit: 100 1,200 million yen

• Passenger demand recovery forecasted for around 2024 • Covid-19 is temporarily depressing market, but • MRO demand recovery expected to precede that of new long-term growth expected aircraft 250% Long-term Growth 1. Aero Structures Market In preparation for market recovery expected from 2024, MHI will 200% increase production efficiency and drive forward new technology Global Passenger Demand Forecast development to participate in future global aircraft programs Global MRO Market Forecast 150% 2. Commercial Aircraft Expanding commercial aircraft business is MHI’s long-term goal ① SpaceJet 100%

Plan Components Given current development status and market conditions, we have no choice but to temporarily pause the majority of SpaceJet activities, except for TC documentation. We will work to review where we stand, Market Demand Forecast 50% make improvements, and assess a possible program restart. (*) 2019=100％ base year demand ② CRJ (MRO) 0% Expand resilient MRO business and utilize commercial aircraft 2015 2019 2025 2030 2035 business know-how

Aero Structure Business Commercial Aircraft Business Tier 1 （） SpaceJet CRJ (MRO)

Temporarily pause M90 development Utilize MRO Expand MRO Build high foundation and Develop new activities business areas performance （Continue TC documentation activities） commercial aircraft technologies organization know-how as TC Review, make improvements, and holder Develop MRO for Share aircraft know-how and non-CRJ aircraft Advance assess possible program restart customer network with SpaceJet Undertake efforts to participate International in future international aircraft Utilize human Cooperation Leverage aircraft Secure synergies programs Efforts resources and Conduct FS for CRJ development know-how in across Commercial aircraft upgrading knowledge Defense Aviation Systems TC: Type Certificate; FS: Feasibility Study; MRO: Maintenance, Repair and Overhaul

Execute various measures to achieve 7% profit margin ③Growth of existing businesses ④Countermeasures/Structural shift ⑤Cost reduction of SG&A* Path to improve business profits (In 100 million yen) 2,800

Impact of 900 COVID-19 ②Impact of COVID-19 2,150 Recovery ①SpaceJet △950 cost minimization 700 Impact of (costs to be reported Business in commercial aviation SpaceJet systems) Profit Margin % Business 7 Profit Margin △1,200 1,200 5.3%

FY19実力コロナ影響 SpaceJe t 0FY20 SpaceJe t コロナ戻り冷熱・物流機器の拡大 FY23事業利益 FY2019 FY2020(Forecast) FY23Target ＠4 tr yen revenue ＠3.7 tr yen revenue ＠4 tr yen revenue (excl. SpaceJet/ extraordinary causes) (excl. Extraordinary causes) *SG&A: Selling, General Admin Expenses

Overcoming COVID-19 Impact Business Environment Business Outlook Measures

Measure 1: • Real aerospace recovery Minimize SpaceJet SpaceJet • Minimize SpaceJet Costs Costs likely in or after FY24 +120 billion yen

Commercial • Recovery of narrowbody • Reduce fixed costs Aviation aircraft will lead to faster • Drive forward manpower CRJ recovery of CRJ and saving and automation Aero Engines aeroengine businesses during COVID period Measure 2: Recover from Turbochargers COVID-19 Impact • Recovery to Pre-COVID • Optimize overseas +70 billion yen Engines levels expected by FY23 production bases Car Aircon • Prepare for market Logistics Equipment recovery by improving productivity HVAC

Grow existing businesses and solve pre-COVID challenges Business Environment Business Outlook Measures Measure 3: • Quick recovery from COVID Logistics impact • Proactively invest in Grow existing Equipment environment-responsive and • Growing market in automation technologies businesses HVAC environment-responsive and ＋20 billion yen automation technologies • Strengthen sales network • Big shift to services Measure 4: Steam Power • Steep reduction in new- • Reduce fixed costs Address challenged Environmental build coal power plants • Reorganize and integrate businesses, Plants organization and bases structural • Shift to services to stabilize transformation; Metals Machinery • COVID has frozen profits (including portfolio Engineering customer investment, • Eradicate losses in EPC competition is growing and optimization) Commercial Ships projects profitability hit +30 billion yen Machine Tools • Strengthen marine engineering business • Aim for 20% reduction in SG&A Measure 5: HQ Corporate • Improve work processes, integrate organization, Reduce SG&A Business Units & Group reduce headcount +40 billion yen Companies • Diversify employment formats, reduce external expenditure © MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved. 17 Plan to Strengthen Profitability (4/4)

Reduce workforce in line with business environment and embark on significant shift in workforce deployment

 Reduced workforce due to lower production in steam power, metals machinery, Global turbochargers, logistics equipment, HVAC, commercial aerospace etc. (around 2,000 jobs)

 Reallocate around 3,000 of workforce due to expected reduction in steam power, commercial aerospace, commercial shipping Domestic  Undergoing program to reassign workforce to growth areas, transfer to organizations outside of Group (approx. 1,000 in H1 FY20)

Thermal Power Commercial Commercial Aviation Ships - 20%

- 50% - 25%

2020 2024 2020 2022 2020 2022

Energy Transition New Mobility & Logistics Expansion of Services Businesses Cybersecurity & Security Technological Foundation to Support Growth Areas

MHI Group will use its technological strengths to lower and capture CO2 emissions and achieve a carbon neutral 2050

CO₂ Vol 50GT Decarbonization and electrification of mobility,

40GT residential and industry

Decarbonization of energy supply

30GT

Carbon free fuel supply

20GT Carbon Neutral

10GT CO2 capture and conversion

※Scenario based on 1.5℃ scenario to achieve carbon net zero globally by 2050 CO2 Capture (Developed by MHI based on IEA, IPCC etc. data) 2020 2050

Combine MHI Group’s wide-ranging products and technologies to make carbon neutrality a reality

Decarbonization and Electrification Mobility Residential Industry  Making a carbon  Electrification  Electrification CO2 Reduction  Maintain  CO2 Free Fuels  Energy saving neutral world a economics reality EMS・VPP Services EMS: Energy Management System VPP: Virtual Power Plant

CO Hydrogen, 2 Clean Fuels, Electricity Heat Ammonia Chemicals

Fuel Supply (new area) Decarbonization of Energy Supply CO₂ Usage (new area) (strengthen current area) Zero CO2 Hydrogen, Ammonia CO2 Production & Storage Increase efficiency and performance Carbon Capture of conventional thermal power  Capture, Transportation  Hydrogen, Electrolysis  Storage  Steam reforming Ammonia Expand renewables  Thermal cracking  CO2 Conversion Methane reforming Surplus Power  Methane cracking Stabilization through storage Convert into industrial materials Heat  Use nuclear to lower CO2 emissions Chemicals  Clean fuels Manufacture clean fuels Balance decarbonization and Capture CO2 from diverse without emitting CO2 stable supply energy sources and convert to valuable resources

New measures to achieve carbon neutrality

Measures

CO2 free hydrogen,  Develop efficient production technology ammonia production (including venture investment) and storage  Build value chain

 Build out business based on our lead as CO2 Capture and global No.1 in volume of CO2 captured Conversion  Build out products and develop conversion technology

Increase Efficiency  Develop and test world’s first pure hydrogen and Performance of fueled advanced gas turbine Thermal Power (Hydrogen Gas Turbines)

 Deliver new value by systemizing diverse products leveraging digitalization and AI New Area  Open up new areas in mobility and logistics through cross-functional collaboration led by MHI Products / Technologies Growth Strategy Office

Logistics, Thermal & External Plants & Infrastructure Drive Systems resources Systems

Logistics ITS Automated Automated Mechanical Growth Strategy Office Parking Lots Warehouses Logistics Solutions Environmental AGV/AGF Infrastructure to Testing Equipment support CASE* Natural Refrigerant Railways, Shipping Chillers Cold Chain (chilled logistics)

M&S Thermal Energy Management Electric Component Defense Systems Business Power Generation Shipping, Aircraft Equipment

External Energy Systems resources Aircraft, Defense, Space

AGV: Automated guided vehicle AGF: Automated Guided Forklift CASE: Connected, Autonomous, Shared and Electric ITS: Intelligent Transport Systems M&S: Modeling and Simulation

© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved. 23 New Mobility & Logistics (2/2) – Example of Cold Chain  Realize a seamless fusion between multiple systems by leveraging analytics technologies (M&S: Digital Twin), supported by real data accumulated through logistic & environmental equipment businesses  Incorporate expertise from external resources, create safer & more secure services through intelligence, and contribute to a more sustainable environment 1. Real Data (Grasp the functional, characteristic, performance limits)

Automated Logistics Natural Refrigerant System Chiller Seamless fusion between systems

Cold Chain (logistics that preserves value)  Secure Quality of Food & Medicine External Thermal Energy  Energy Saving Resources Management  Reduce Losses across Logistics Chain Knowledge of merchandise conditions to Foundation of AI maintain quality Learning Digital Twin 2. Modeling and Simulation Technologies 3. AI Technologies M&S: Modeling and Simulation

Leverage Digital Transformation (DX) to increase service business portfolio

Strengthen common platforms Activities of each businesses Advanced DX examples within MHI Group Strengthen refurbish proposal Steam Power towards carbon neutrality +30% Operation Support Strengthen global Compressor Services • Efficiency service structure Revenue improvement • Anomality detection Aero Engine Expand MRO businesses FY20 FY23 Inhouse parts repair

Establish maintenance JVs Maintenance Solutions Metal Machinery with customers +25% Support Digitalization • Advanced Predictive • Customer portal Services Analysis Strengthen • Long-term maintenance Revenue proposal • Spare parts SCM Engineering incorporation of O&M in transportation FY20 FY23

Upgrade & MRO businesses +15% Expand services business through DX Defense Repair business for US • Establish a taskforce to aggregate expertise forces in Japan Services within MHI Group, share best practices, and Revenue promote adoption of digital tools FY20 FY23

© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved. 25 Cybersecurity & Security  Promote measures adapted to changes in trends in defense and space, and expand dual use for private sector Measures in Dual Use for Private Environment Trend Defense/Space areas Sector

• Utilization of information • Strengthen the analytic • Utilize analytic technologies for using space becoming technology of wide-area areas like disaster mitigation to more sophisticated image data, “BRAINS” contribute to a safer and more secure world Leverage Space

• Cyber threats becoming • Develop and expand the • Provide more sophisticated more apparent application of “InteRSePT”, a services by applying systems to • Urgent need to strengthen system to monitor the protect important infrastructure Defend cybersecurity of defense operation of defense Cyberspace equipment equipment and detect anomalies ®

• More difficulty in securing • Develop “CoasTitan”, an • Utilize to monitor, inspect, and workforce due to declining integrated control system for strengthen services for important birth rate unmanned vehicles (UAVs, infrastructure Utilize • Utilizing unmanned USVs and UUVs) Unmanned systems to maintain or strengthen the defense Systems TM capability

 Utilize and incorporate technologies accumulated from across broad business areas into strategic growth products by adjusting to the transition in customer needs and machinery systems Energy Transition Build a safer world Electrification/Intelligence Energy Integration/Management, Strengthen Data Security of Machinery Systems Response to Disaster/Severe Environment Decarbonization, Carbon Recycling by Unmanned Tech. & Data Validation Automated/Autonomous Plant Operation Next Generation AGV/AGF, EV Component/Mobility

AI/Intelligence New Activities to Realize Innovation

Create new value by adding digital technologies Innovation Promotion Research Institute Develop unconventional functions built out from Digital Twin Data Security Data Science cutting-edge technology

Sensor Network IoT/AI Automation Intelligence Yokohama Hardtech Hub (YHH) Open a “co-creation place” for start-ups to realize their ideas Deepening tech. foundation & creating new function Introduce Pivot Development Operate certainly and efficiently complex machineries Grasp market needs/opportunities quickly, break and plants down new technical issues, develop at a speed that 3D integrated surpasses start-ups Sensing Robotics Simulation

Build unconventional functions H2 Production & AM Elemental Catalyst Conversion Utilization Utilization AM: additive manufacturing

 2021 MTBP focuses on strengthening profitability, investing in and developing high growth businesses • Return to and strengthen profitability coming out of COVID-19 • Invest 180 billion yen in growth areas and create 100 billion yen in new businesses  Energy Transition and New Mobility & Logistics represent our primary growth engines • Drive forward energy transition aiming for a carbon neutral 2050 • Open and embed new business areas in mobility etc. • Nurture 1 trillion yen revenue in new businesses by 2030 • Cross-functional measures led by Growth Strategy Office

1. Energy Transition 2. Shared Foundation and Business Area 3. Energy & Environment 4. Aircraft, Defense & Space 5. Industry & Infrastructure (mass and medium lot manufacturing) 6. Industry & Infrastructure (build to order) 7. Materiality 8. TOP (Triple One Proportion)

Zero CO2 Hydrogen and  Move beyond MHI’s existing core strength in Ammonia hydrogen and ammonia usage and build an entire Existing Products Production and Storage value chain including production New Areas

Primary Energy Hydrogen Transport / Usage Production Storage

Renewables Hydrogen Electrolysis Storage Hydrogen GT Vestas

Strengthen Invest in hydrogen partnership Develop Green Hydrogen production, storage and manufacturing plant Hydrogen hydrogen gas turbine business in production, storage, four Southern US states and supply business Nuclear Steam Reforming/ H2 Cracking in Utah, USA Zero GHG emission ships NH3 HTGR Founding Member of Mærsk Mc- development Kinney Møller Center for Zero Carbon Shipping

Hydrogen reduction in Methane Reforming steel making Natural Gas (CO2 capture)/ Methane Cracking

GHG: Greenhouse Gas

Carbon Carbon  MHI Group is global No.1 in volume of CO2 captured Conversion Capture & Usage  MHI will expand its product lineup and invest in conversion technologies to expand business

2020: World’s largest As of 2020, MHI has largest 2016: World’s largest bioenergy with carbon global installed base market Carbon Capture plant at share in carbon capture 7

capture and storage *1 steam power plant in (BECCS) pilot facility with Texas, USA Drax, UK /year) 2 CaptureVol. 2 (GtonCO Expecting explosive growth CO MHI Group: 0 2020 2030 2040 2050 70%+ share *1:Predicted CO2 capture vol. needed to achieve global carbon net zero at the earliest later than 2050, in accordance with the “1.5 °C Scenario”

Thermal Power Industrial Use Cement Plants CO Conversion Fuel Synthesis Steel Plants 2 CO2 Capture & Usage Valuable Resources Factories & Waste Treatment Transport Underground Storage Commercial Facilities

Increased energy-use Renewables Storage efficiency

EMS: Energy Management System VPP: Virtual Power Plant  Offshore Wind  Increased energy-use efficiency  Build energy solution provider business by  Strengthen Partnership with Vestas combining large domestic market share in private • Improve competitiveness through integration of industrial power generation and ENERGY CLOUD offshore and onshore wind • Exchange MHI’s shares in MVOW to Vestas shares, gain seat on Vestas board VPP Services • Focus on MHI’s areas of strength EMS Services Aggregate market • Japan, APAC sales JV Demand prediction transactions and regional • Japan production and supply chain and IPP resources MVOW: MHI Vestas Offshore Wind IPP: Independent Power Producer  Expand into New Areas  Energy Storage • Explore joint development with Vestas in hydrogen  BESS (Battery Energy Storage Systems) • Project development for offshore wind in Hokkaido US orders totaling 220MW with Copenhagen Infrastructure Partners (CIP) (20MW in South California, 200MW in Texas) Roll out to other regions

 EBLOX (triple hybrid stand-alone power

generation system) Offshore Wind Turbines by MHI Vestas Offshore Wind Expand renewables-linked products

 CCUS (carbon recycling) and conversion to hydrogen/ammonia fuels leading to zero CO₂ emissions Increase efficiency and performance of existing  Hydrogen Gas Turbines are catalyst for hydrogen demand（GT400MW＝2 million FCVs） thermal power

CO2 Reduction CCUS Zero CO2 emission tech Increase efficiency and performance of current thermal power (Carbon Recycling) Decarbonization through fuel conversion JAC class Advanced GT Hydrogen GT Advanced ultra- Coal, LNG Power supercritical -20% Development Development IGCC Development +CCUS ZERO CO2 Boiler Tech CO2 Development Emissions -20% Ammonia, Biomass -65% -90% or more Co-firing Hydrogen-fired GT

Base Base*1

Ammonia ZERO CO2 % GT Development -20 (ammonia cracking) IGCC Development Ammonia, Biomass co-firing

50% Emissions (%) Emissions 2 -65% CO Coal→High- efficiency LNG Convert to JAC- % or less class -90 Zero CO2 emissions T-Point 2 64% GTCC(2020 operation) CCUS adoption 0% Ammonia, hydrogen *1 :Based on CO2 emissions of sub critical pressure coal fired boiler Technology Timeline 2020 2030

 Drastically reduce CO emissions from power generation sector by restarting Reducing CO 2 2 existing nuclear power plants and building new ones emissions with nuclear  Stable and high volume production of Hydrogen with High Temperature Gas Cooled Reactors (HTGRs)

Restart existing nuclear power plants

Zero CO2 Maintain readiness new build Power nuclear power plants

Zero CO2 Production of Hydrogen Hydrogen with HTGRs

% CO2 emissions during -60 ※2 Hydrogen Related hydrogen production reduction Base Facility (from current)

HTGR Steam Reforming (%) 1 ↓ ※ Electrolysis, Cracking ZERO CO2 75% Emissions Emissions 2 CO 50% 2020 2030 2040 2050

※1: Predicted CO2 emission reduction if nuclear replaced steam power ※2:Total CO2 emissions in power generation

 Accumulate technologies, expertise and personnel cultivated across a broad range of businesses in shared foundation  Businesses will leverage strengths of the shared foundation to drive growth based on their respective strategies Energy & Environment Drive Energy Transition Market transformation due Infrastructure to decarbonization Aircraft, Defense & Space Improve quality of life Build a safer world Explore and shift into new areas Dynamic and competitive using combined strength of the Develop and deliver advanced market Group technologies build on high trust, safety and quality

Deliver fast corporate Steady, customer focused decision making Strengthen shared management foundation to support businesses 1. Group Management 2. Technology 3. People 4. Financial Base • Mission, vision, values • Centralize and develop • Increase diversity • Acceleration of re-allocation of resource • Strengthen responsibility, technologies and knowhow • Increase mobility • Improve and maintain financial soundness authority and organization • Drive forward digitalization Corporate Culture

 Balance profitability and growth potential to adjust portfolio and achieve a carbon neutral world by 2050  Maximize global foundation and resources within Mitsubishi Power across MHI Group

Business Market Trend Scale NewNew Areas Area Business (5-10 years) Main Steps Develop and test high efficiency and alternative fuel converted gas turbines

Demand expected to Upgrade equipment for bolstered servicing GTCC remain stable, (high temperature parts of GTs) generate new value with Test autonomous operation at T-Point 2 hydrogen gas turbines Increase profitability by reducing costs

Support domestic restarts, fuel cycle Nuclear Development of next-generation reactors, current reactors (HTGRs, small size etc.)

Shift Resources Maximize Mitsubishi Power resources Aero engines Increase synergies • Strengthen internal production capability Marine machinery • Strengthen services business Compressors • Develop mechanical drive systems in Oil & Gas

Optimize productivity of boiler factories Steam Power amidst large drop off in new builds Air Quality Control Systems Focus on services, expand menu of low- carbon solutions FY20 FY23 © MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved. 37 4. Aircraft, Defense & Space

 Maintain and expand dominant position in Defense & Space business, proactively develop new technologies  Expect longer-term drop in aircraft market due to COVID-19, strengthen organization for future growth

Business scale Market Trend Business (5-10 years) Main Steps Maintain and expand domestic existing and peripheral areas • Start development of next-gen fighter • Move to operations of H3 rocket Overseas business rollout using joint Defense & development and transfer of domestic Space equipment (government-linked) New tech to build a safer world • Cybersecurity • Unmanned surveillance • Wide-range image data processing Tier-1 Aerostructures • Personnel saving and automation technologies to increase profitability • Reorganize base and supply chain • Change processes and increase Commercial automation MRO Business Aviation • Drive forward PMI, synergies • Prepare for post-COVID growth

FY20 FY23

 Recover from COVID crisis quickly and increase investment in growth businesses

Business Scale Market Trend Business (5-10 years) Main Steps

Strengthen sales strategy from Japan and US to include Europe and APAC Logistics (Reorganize sales network, launch new Equipment products) Expand solutions business

Expand B2B business (Regionally matched product lineup)

HVAC Expand environmentally friendly products Car Aircon including natural refrigerant Build global business around electric compressors

Cut fixed costs in response to fall off in market due to COVID Engines Invest in growth markets and Turbochargers technologies based on current well- managed businesses FY20 FY23

 Respond to change in market environment after COVID, and make structural improvements to increase profitability

Business Scale Market Trend Business (5-10 years) Main Steps

Environmental Invest in growth markets and Equipment technologies based on current well- managed businesses

Machinery Portfolio management and shift in human Systems resources

Organizational and base reorganization Engineering adapting to the market circumstances Metals Machinery Commercial Ships Strengthen risk management for large Machine Tools projects Shift resources to “Energy Transition”

FY20 FY23

© MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved. 40 7. Merging Non-Financial and Financial – Materiality  Defining Materiality for MHI Group • Streamlined and analyzed the issues which MHI Group should prioritize to deal with, from both a “Social perspective” (e.g. recent rising focus on SDGs and climate change), and “Our perspective” (MHI Group’s vision). Through dialogue with stakeholders, the Materiality that MHI Group should tackle have now been defined • Materiality progress will be monitored by mid- to long-term “targets” and “KPIs” set as milestones, and by linking business activities and non-financial indexes. In addition, we will communicate with a broad range of stakeholders our contribution to building a sustainable world Materiality Social Issues SDGs ①Provide energy  Mitigate climate change  Improve energy efficiency Business Contribution solutions to enable  Reduce GHG emission  Popularize renewable energy decarbonized world  Stable energy/electricity supply  Promote 3R*/circulation economy

(Business)  Enhance transportation  Promote AI/digitalized society ②Transform society safety/convenience  Enhance productivity to react to through AI and  Decarbonize mobility labor shortages  Diversify transportation needs digitalization  Update outdated facilities  React to increased logistics  National security by defense  Interfere with cyber attacks on  Adapt to climate change ③Build a safer and more industrial systems / IoT  Enhance function/durability of  Prevent pandemics & take appropriate secure world infrastructure measures  Rationalize infrastructure support Business Foundation Foundation to

(Corporate) ④Promote diversity and  Nurture/secure workforces  Enhance labor productivity uplift employee  Respect human rights  Labor safety & hygiene engagement  Promote diversity  Promote health management  Fair competition/business compliance  Corporate governance ⑤Enhance Corporate  Grasp overall corporate  Comply with law/international risk/management Governance order  Timely disclosure *3R: Reduce, Reuse, Recycle © MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved. 41 8. MHI Group Management KPI - Triple One Proportion (TOP)

 “TOP” is MHI Group’s overall management Key Performance Index(KPI) to evaluate the balance among value provision to customers, business foundation, and evaluation from society, aiming the equal balance -1:1:1- among three management factors: net sales, total assets, and market value.

Social Issue （ESG/SDGs）

Value to customers Evaluation through business from society activities TOP Triple One  Contribute to solve social Proportion Non-financial index issues through business  Materiality KPI (set ahead) activities Total Asset  Execute business strategy Financial index  Profit (ROE/EBITDA etc)  Revenue growth rate  SAV (ROIC・WACC) Business Foundation Allocate resources, optimize business portfolio, Enhance performance of workforce & Balance Sheet