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Jun 4, 2012 ... 2012 MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved ... Gathering of EPC units from three business headquarters. Before change.

Business Briefing on Engineering Headquarters Takato Nishizawa Head of Engineering Headquarters

June 4, 2012 1

© 2012 MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

Contents

1. Establishing the Engineering Headquarters: Background and Objectives 2. What is Engineering? 3. Business Overview of the Engineering Headquarters 4. Enlarging Existing Businesses 5. Expanding into New Fields and Businesses 6. Summary

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1. Establishing the Engineering Headquarters: Background and Objectives (1) MHI’s problems and actions for business expansion

Business scale expansion

EPC integration

Split into specialized companies

Integration of EPC units dispersed in the company Background External Environment Internal Environment

Needs from society - Increase in large-scale infrastructure projects - Emergence of solution businesses Limitations on growth of the business scale under the conventional style of management (with business headquarters and works)

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1. Establishing the Engineering Headquarters: Background and Objectives (2) Setup of the Engineering Headquarters

Integration ofEPC EPCunits unitsfrom fromthree threebusiness businessheadquarters headquarters Gathering of Before change

After change

Sustainability Energy & Environment Strategic Planning Dept.

Power Systems Plant Engineering Procurement & Construction Division

Engineering Engineering Headquarters Headquarters EPC

Overseas nuclear projects

(Consolidated)

Power Systems

Nuclear Energy Systems President

Approx. 5,000 staff members

EPC

Nuclear Energy Systems

Large-scale infrastructure projects

EPC

Environment & Chemical Plant Division

Machinery & Steel Infrastructure Systems

EPC

President

Machinery & Steel Infrastructure Systems

Other business headquarters © 2012 MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

Other business headquarters 4

1. Establishing the Engineering Headquarters: Background and Objectives (3) Objectives (Vision) of the Engineering Headquarters

Objectives (Vision) • Become a globally recognized engineering group with worldleading EPC capabilities. • Build a low-risk, high-return business structure to boost the receipt of orders and earnings. © 2012 MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

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1. Establishing the Engineering Headquarters: Background and Objectives (4) MHI’s advantages: (i) Strengths of the EPC units backed by manufacturing

Strengths of EPC units backed by manufacturing Differentiation with technologies unique to manufacturers Apply the core product technical capabilities developed through the design and production of power plant-related equipment to the engineering of equipment and machinery constituting various plants.

Active use of in-house R&D functions Make effective use of extensive basic and applied technologies owned by six research and development centers to develop new technologies and to swiftly resolve emerging problems.

Advantage through cross-sectional expansion of control technologies Apply the technologies embodied in power plant monitoring and control systems to environment and chemical plants and large-scale transportation systems to differentiate control technologies for plants and systems.

Enhanced constructing quality with advanced production technologies developed through manufacturing Apply advanced welding, assembly, and other manufacturing technologies and production management approaches to on-site construction work to improve work quality. © 2012 MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

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1. Establishing the Engineering Headquarters: Background and Objectives

(4) MHI’s advantages: (ii) Synergy from its unification organization and economies of scale

Synergy enjoyed from organizational unification and economies of scale Business growth through united efforts on companywide cross-sectional projects Expand solution businesses that involve multiple business headquarters, such as total energy management for factories, water solutions and smart community.

Enhancement in project operation capacity through integration of common resources Integrate resources common to different businesses, such as those for sales, design, procurement, construction and quality control, to bolster the capacity to implement projects.

Deriving economies of scale in material procurement Derive economies of scale in cross-sectional material procurement for power plants, environmental and chemical plants, overseas nuclear plants, and largescale infrastructure.

Cross-sectional expansion of best practices in project implementation Share advanced project management techniques, risk management, and design tools based on extensive experience to meet the increasingly advanced, diversified, and complex needs of customers. © 2012 MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

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1. Establishing the Engineering Headquarters: Background and Objectives (5) Acceleration of global expansion through sharing and unifying overseas bases

Acceleration of global expansion through sharing and unifying overseas bases Environmental Environmental Systems Systems Division, Division, MHIA MHIA

ATMEA ATMEA (A (Ajoint jointventure venturewith withFranceFrancebased basedAreva) Areva) Development and Development andaction actionfor for authorization, authorization,marketing marketingand and sales salesfor forthe theATMEA1, ATMEA1,1.1-MW1.1-MWclass classmedium-sized medium-sizedreactor reactor

AAbase basefor forenvironmental environmental business business(CO2, (CO2,multi-emission, multi-emission, etc.) and E&P etc.) and E&Pbusiness businessfor forthe the Americas Americas

Nanjing Nanjing TianLing TianLing Energy Energy Technology Technology Co., Co., Ltd. Ltd.

MHI MHI Engineering Engineering Vienna Vienna

ADVATECH ADVATECH

GTCC GTCCdesign designand andprocurement procurement

(A (Ajoint jointventure venturewith withUS-based US-based URS) URS) Design, procurement, Design, procurement, installation, installation,and andtrial trialoperation operation of offlue fluegas gasdesulfurization desulfurization systems systems

Receipt Receiptof oforders, orders,design, design,and and project projectimplementation implementationfor forGTCC GTCCin in Europe Europeand andelsewhere elsewhere

MPSA MPSA

MHI MHI

MEIP MEIP (A (Ajoint jointventure venturewith withOmanOmanbased basedSBG) SBG) EPC contractor EPC contractorfor for environmental environmentaland andchemical chemical plants plants

MPS-India MPS-India EPC EPCcontractor contractorfor forGTCC GTCCmainly mainly in inIndia India

• MIES: MHI Industrial Engineering & Services Private Ltd. • MEIP: MHI Engineering and Industrial Projects India Private Ltd. • MTS: MHI Technical Services Corporation

Receipt Receiptof oforders, orders,design, design,and and project projectimplementation implementationfor forGT GTpower power trains trainsfor forthe theAmericas Americas

MIES MIES EPC EPCcontractor contractorfor for environmental environmentaland andchemical chemical plants plants

MTS MTS Thermal Thermalplants, plants,environmental environmental and andchemical chemicalplants, plants,detailed detailed design designfor fortransportation transportation

MNES MNES Receipt Receiptof oforders, orders,design, design, procurement, procurement,and andproject project implementation implementationfor for nuclear nuclear equipment equipmentUS-APWR US-APWRfor forthe the Americas Americas

• MNES: Mitsubishi Nuclear Energy Systems • MPSA: Mitsubishi Power Systems Americas

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2. What is Engineering?

(1) A close look at engineering

Engravings on the Albert Memorial Albert Memorial was constructed by Queen Victoria in the 19th century in memory of her husband, Prince Albert. On the four plinths, four industries that supported British prosperity in those days are engraved.  Agriculture  Commerce  Manufactures  Engineering This implies that engineering was literally a pillar of industry in those days. Source: Engineering Advanced Association of What is engineering? Japan’s website: What’s Engineering  Engineering is an approach of designing and constructing facilities and systems that meet social needs with the use of the knowledge and techniques (human potential) of the project team. (e.g., the Pyramids in Egypt, the Great Wall of China, and the Roman aqueducts)

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2. What is Engineering?

(2) Engineering and “Project Management & System Integration”

Consulting Operation & maintenance

Project planning

E

Engineering Basic design & detailed design

Q

Quality

C

Cost

C

P

Construction

Procurement & transport

D

Delivery

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S

Safety

The goal of engineering is to ensure these four qualities.

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3. Business Overview of the Engineering Headquarters

(1) Energy, environmental solutions, and industrial infrastructure

Energy, environmental solutions, and industrial infrastructure GTCC power plants IGCC power plants Coal power plants Renewable energy plants Overseas nuclear power plants

Desalination plants CO2 recovery plants

Energy Supply

Industrial Environmental Infrastructure Solutions

Fertilizer plants Methanol plants Purified terephthalic acid plants

Flue gas desulfurization plants

Polyethylene plants Large-scale transportation systems

Water solutions Smart community © 2012 MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

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3. Business Overview of the Engineering Headquarters (2) Engineering and Manufacturing

Engineering and Manufacturing Renewable energy related equipment

Vehicle and transportation systems

Power Systems [Manufacturing]

Large-scale infrastructure projects

Smart community Engineering business

Nuclear equipment

Environmental and chemical plants

Overseas nuclear plants Nuclear Energy Systems [Manufacturing]

Thermal plants

Compressors Machinery & Steel Infrastructure Systems [Manufacturing]

Boilers, gas turbines, steam turbines

Power Systems [Manufacturing] 【ものづくり】

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3. Business Overview of the Engineering Headquarters (3) Examples of the engineering business (i)

Energy (thermal plants and nuclear plants) Thermal plants

Overseas nuclear plants

Kawasaki Thermal Power Station of Tokyo Electric Power Company Inc.

US-APWR (Advanced PWR for the United States) GTCC (Indonesia)

Coal fired thermal plant in Chile

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3. Business Overview of the Engineering Headquarters (3) Examples of the engineering business (ii)

Renewable energy

Introducing renewable energy tailored to local conditions

Wind

Hydraulic

Offshore wind turbines

Water turbines

Srinagarind Power Station, EGAT, Thailand

Geothermal Geothermal plant

Nesjavellir, Iceland

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3. Business Overview of the Engineering Headquarters (3) Examples of the engineering business (iii)

Fertilizer plants

Fertilizers such as ammonia and urea are essential to agricultural or food production. Ammonia plant in Indonesia

Fertilizer plant in Oman

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3. Business Overview of the Engineering Headquarters (3) Examples of the engineering business (iv)

Desalination plants

Producing freshwater from seawater to supply water to regions short in water resources Rabigh Sea Water Reverse Osmosis Plant, Saudi Arabia Water production capacity: 192,000 tons a day

Water molecules contained in seawater are passed through semipermeable membranes to remove salt and hazardous substances and produce fresh water.

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3. Business Overview of the Engineering Headquarters (3) Examples of the engineering business (v)

CO2 recovery plants Bahrain: 450 tons per day

Recover CO2 in flue gas and inject it into oil field to increase oil production. The injected CO2 is immobilized in the ground. United States: 500 tons per day

Schematic Diagram of CO2 Recovery and Enhanced Oil Recovery (EOR) A chemical absorption technique is used to recover CO2 from the flue gas emitted from power plants and factories. The CO2 is then conveyed through pipelines to oil fields and used for EOR.

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3. Business Overview of the Engineering Headquarters (3) Examples of the engineering business (vi)

Large-scale transportation systems Contribution to modal shift Taiwan High Speed Rail Project

Maximum speed in commercial operation: 300 km/h

Dubai Metro Project

Full automatic unmanned operation

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4. Enlarging Existing Businesses (1) Market scales

Power plants

Environmental and chemical plants

Thermal plants (gas-/coal-fired)

Environmental plants (CCS and others)

Power plant capacity (GW)

(GW)

2,000

2,500 2,000 1,500 1,000 500 0

1,500 1,000 500 0

2009

2020

Gas

(trillion yen)

4 3 2 1

2009

2020

Coal

Infrastructure investments in 20102010-2020

0 2010

2020

Chemical plants (trillion yen)

30

(trillion yen/year)

14 12 10 8 6 4 2 0

20

10

0

Gas

Coal

2010

2020

Source: Created by MHI on the basis of UDI, Mccoy, IEA WEO2011, IEA CCS Road Map and Engineering News Record © 2012 MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

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4. Enlarging Existing Businesses (2) Chemical plants (i)

Recent circumstances

Actions for growth

 Major projects • Fertilizer plant • Methanol plant • Purified terephthalic acid (PTA) plant • Polyethylene Fertilizer plant plant  Fertilizer plants experiencing medium- and long-term growth

 Positive actions centered on fertilizer and methanol plants in emerging countries in the CIS (ex-USSR) zone, in Africa, and elsewhere

MHI MHI received received an an order order for for a a large-scale large-scale fertilizer fertilizer plant plant to to produce produce ammonia ammonia and and urea urea in in Malaysia Malaysia in in October October 2011. 2011.

MHI MHI signed signed an an early early work work agreement agreement for for a a fertilizer fertilizer plant plant in in Angola Angola in in November November 2011. 2011.

 The order was jointly received from PETRONAS Chemical Fertilizer Sabah Sdn. Bhd. with APEX Energy Sdn. Bhd. and PT Rekayasa Industri.

 Boosting actions for effective use of natural gas  Increasing competitiveness and accelerating global expansion with EPC implementation at overseas bases such as MIES in Singapore and MEIP in India

 MHI, Toyo Engineering Corporation, Sojitz Corporation, and Sumitomo Corporation entered into an early work agreement covering part of the engineering work (plant basic design, preparation of engineering documents and contracts, site surveys and other work) for an ammonia and urea fertilizer plant with the Ministry of Geology, Mining and Industry (MGMI) of the Republic of Angola.

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Soyo

Dem. Rep. of the Congo

Luanda

Angola Zambia

African Continent Namibia

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4. Enlarging Existing Businesses (2) Chemical plants (ii)

MHI MHI is is among among the the market market share share leaders leaders in in the the worldwide worldwide market market of of fertilizer fertilizer plants. plants.  Increasing food production amid population growth and improved living standards is a global issue.

One of the market share leaders with an excellent track record in fertilizer plant construction

A world-leading manufacturer of high efficiency compressors and drive turbines at the heart of plants  A large-scale ammonia and methanol concurrent production facility for the Rep. of Tatarstan

MHI is the world’s only company to have constructed an ammonia and methanol concurrent production facility.

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4. Enlarging Existing Businesses (3) Environmental plants (i)

Recent circumstances  Flue gas desulfurization plants: • Stepping up efforts to win projects mainly for seawater desulfurization plants in emerging countries  CO2 recovery plants: • An industry-leading track record in orders for commercial plants (to construct 11 plants) • Working on projects to boost fertilizer production in the Middle East and Asia as well as a verification project in the West

Actions for growth  Flue gas desulfurization plants: U.S. environmental regulations tightened Focusing energy on seawater desulfurization plants in Asia  CO2 recovery plants: •Action for large-scale CCS/EOR(*) projects •Projects at MIES, MEIP and other overseas bases underway

(*) CCS: Carbon capture and storage, EOR: Enhanced oil recovery

A A carbon carbon capture capture facility facility at at Southern Southern Company’s Plant Barry came Company’s Plant Barry came into into operation operation in in June 2011 to capture 500 ton/day CO . June 2011 to capture 500 ton/day CO22 .  The carbon capture facility came into operation in June 2011.  A total CO2 recovery volume reached 57,580 tons as of April 12, 2012, after 3,044 hours of operation.  Underground storage is set to start around summer 2012.

MHI MHI received received the the first first order order for for a a large-scale large-scale CO CO22 recovery recovery plant plant for for increasing increasing methanol methanol production from a petrochemical company production from a petrochemical company in in Qatar in March 2012. Qatar in March 2012.  It is the first order received for a CO2 recovery plant for increasing methanol production. It will have a world-class CO2 recovery capacity for commercial systems for chemical purposes, at 500 ton/day.  It is the first EPC order received by MIES.

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4. Enlarging Existing Businesses (3) Environmental plants (ii)

CO2 CO2 recovery recovery plants plants (commercial (commercial and and demonstration demonstration facilities) delivered or under construction facilities) delivered or under construction

1999: 200 ton/day Malaysia

2009: 450 ton/day Bahrain

2005: 330 ton/day Japan

CO2 Recovery (CDR) Plant – IFFCO Aonla Unit (India)

CO2 Recovery (CDR) Plant – IFFCO Phulpur Unit (India)

2006: 450 ton/day India

2006: 450 ton/day India

2010: 240 ton/day Vietnam

2011: 340 ton/day Pakistan

2009: 450 ton/day India

2011: 500 ton/day United States

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Q2 2012: 450 ton/day India

2009: 400 ton/day Abu Dhabi

Q2 2014: 500 ton/day Qatar 23

4. Enlarging Existing Businesses (3) Environmental plants (iii)

MHI MHIis isthe theworld worldleader leaderin influe fluegas gasCO CO22recovery recoverytechnology. technology.  The large-scale CO2 recovery demonstration plant (with CO2 recovery capacity of 500 ton/day) at Southern Company’s Plant Barry in the United States

A CCS demonstration facility among the world’s largest at a coal-fired power plant The potential for boosting capacity to 3,000 ton/day or more

 A track record of delivering 12 commercial and demonstration facilities (with the KS-1TM process jointly developed with Kansai Electric Power Co., Inc.)

An overwhelming market share in commercial facilities Commercialization achieved earlier than the competition to lead in energy-saving technologies

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4. Enlarging Existing Businesses (3) Environmental plants (iv)

MHI MHIis isthe theworld worldleader leaderin influe fluegas gasdesulfurization desulfurizationtechnology. technology. 

Market share: 43% in Japan, 14% in the world (on MW basis)

World-leading market share with flue gas desulfurization technology A track record that includes delivering more than 200 plants around the world

 Mitsubishi Flue Gas Treatment System

MHI as a one-stop provider of boilers, denitrification equipment, electrostatic precipitators, desulfurization plants, and CO2 recovery plants Clean gas

Boiler

Denitrification equipment

Electrostatic precipitator

Flue gas desulfurization system

CO2 recovery system

Stack Dust CO2 compressor

© 2012 MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

CO2 storage

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5. Expanding into New Fields and Businesses

(1) Market scale of the large-scale infrastructure and solution business

Large-scale infrastructure

Water solutions

Overseas nuclear plants • Full-scale launch in this market after gathering EPC knowledge in the whole company

(trillion yen)

Market Scale

6 4

2 0 2010

2020

Large-scale transportation system (railways) • Overseas high speed railway projects and other largescale railway projects

(trillion yen)

Market Scale

20

10

• Desalination • Industrial water • Industrial sewage • Recycled water

(trillion yen)

Market Scale

100

50

0 2010

2025

Smart community • Renewable energy • Power storage systems • Energy management

(except in North America and Europe)

0 2010

Source:

Solutions

2020

(trillion yen)

Market Scale

600 500 400 300 200 100 0 2010

2020

Created by MHI on the basis of materials from the Ministry of Economy, Trade and Industry, the Ministry of Land, Infrastructure, Transport and Tourism, Japan Atomic Industrial Forum, Inc. and Mitsubishi Research Institute, Inc. and Sekai Smart City Soran (Comprehensive Guide to Smart Cities of the World)

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5. Expanding into New Fields and Businesses (2) Total solutions in energy and the environment

E

Stable supply

Generation-side MHI product/ technology Lithium-ion battery

Consumption-side Application

MHI product/ technology Observation satellite

Storage

(H-II rocket)

Total Solution

Exploration

Deep-sea drilling vessel: Chikyu

Research submersible:

Wind

Eco-ship

Geothermal

MRJ

Sea

Solar

Shinkai

Power generation Power consumption

GTCC

Transportation system Turbo-charger Steelmaking machinery

Nuclear

PWR

Industrial equipment and machine tools

Waste treatment

Gasification and melting incinerator

CCS

CO2 recovery plants

Air conditioner High efficiency heat pump

(as an example of total solution)

Recycle

Integration & Optimization

Recycle

Water treatment and reclamation plants

Industrial processing Air conditioning and refrigeration equipment and machinery

Land

IGCC

Low-Carbon Smart Community

Transportation systems

Air

Land

Biomass treatment / generation

Thermal power generation

Reduction of impacts

Application

Hydraulic

Renewable energy

nvironment

Space

Power storage

E

nergy

Water treatment

Land © 2012 MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

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5. Expanding into New Fields and Businesses

(3) Total energy solutions in factories (an example of energy demand-supply optimization)

Energy and environmental management Waste heat in factory coolant Coolant waste heat

Gas engine cogeneration system

For conveyance of components

(Air heat source)

LithiumLithium-ion rechargeable battery

Heat pump

Renewable energy power plant

Hybrid forklift truck

Used for air conditioning Grid power

Used for drying

Press Working

Machining

Coating

Assembling

Inspection

Distribution

Monitoring and visualization of energy and water consumption Industrial water

[Water treatment process]

Use of intermediate water

River

Industrial water treatment system River

Industrial wastewater

Sewage treatment system

Water recycling system

Industrial wastewater treatment system

Power flow Heat flow Water flow Data flow

Operation and control in light of demand from processes and the characteristics of equipment introduced for optimization as a comprehensive system. © 2012 MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

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5. Expanding into New Fields and Businesses

(4) Smart community: DMIC in India – Sanand District in the State of Gujarat

Four core infrastructures proposed for the industrial estate in the Sanand District in the state of Gujarat Layer Layer 6 6 Waste Waste Treatment Treatment and and Power Generation Power Generation

Sanand Industrial Estate I.C. Water Supply & Treatment

OCC

Layer Layer 5 5

Transportation Transportation System System Layer Layer 4 4

Water Water Solution Solution

MMM Waste to Energy

Layer Layer 3 3

Power Power Supply Supply from from Microgrid Microgrid Station

PV

Layer Layer 2 2 New New Factories Factories and and Residential Residential Zone Zone (future (future plan) plan) Layer Layer 1 1 Existing Existing Factories Factories

ESS

Plug-in Hybrid Garbage Truck

Map of the Sanand District © 2012 MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

CEMS

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6. Summary

Business Target of the Engineering Headquarters Targeting a two-fold increase in orders compared to 2010 in 2016 (trillion yen)

20000

New businesses 新事業 Existing businesses 既存事業

1.4 1.2

10000 0

0.9 0.7

22010 010

22012 012

Missions to achieve the target

22014 014

22016 016

Note: The figures include portions of relevant business headquarters (Power Systems, Nuclear Energy Systems, and Machinery & Steel Infrastructure Systems) as well as the Engineering Headquarters.

• Expand the orders for large-scale infrastructure projects including the existing EPC business. • Contribute to the expansion of the internal core technology and product business. • Work on the solution business, including the smart community and general water business. • Further business development of next-generation businesses. © 2012 MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

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Forecasts regarding future performance in these materials are based on judgment made in accordance with information available at the time this presentation was prepared. As such, those projections involve risks and insecurity. For this reason, investors are recommended not to depend solely on these projections for making investment decision. It is possible that actual results may change significantly from these projections for a number of factors. Such factors include, but are not limited to, economic trends affecting the Company’s operating environment, currency movement of the yen value to the U.S. dollar and other foreign currencies, and trends of stock markets in Japan. Also, the results projected here should not be construed in any way as being guaranteed by the company. © 2012 MITSUBISHI HEAVY INDUSTRIES, LTD. All Rights Reserved.

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