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MHI, IHI and DBJ Conclude Three-way Agreement On Investments into New Commercial Aero Engine Company: Mitsubishi Heavy Industries Aero Engines, Ltd.

Tokyo, Aug 29, 2014 - (JCN Newswire) - Mitsubishi Heavy Industries, Ltd. (MHI), IHI Corporation and the Development Bank of Japan Inc. (DBJ) concluded a three-way formal agreement today on their respective investments into a new commercial aero engine company, Mitsubishi Heavy Industries Aero Engines, Ltd., to be launched on October 1. The new company will succeed to MHI's business in commercial aero engines under a company split action, as MHI previously announced on March 31 and August 28.

To solidify its position as a partner company in joint international development programs in the commercial aero engine market - where continuous and robust growth is expected - the new company will focus on improving its financial base. It will also pursue enhanced competitive operation by improving productivity through the formation of a large-scale cooperative production.

Specifically, in the area of low-pressure turbine blades, a product expected to mark increased production in coming years, the new company will forge long-term cooperative production ties with IHI that possesses one of the world's leading production capacities in this field. Initiatives will also be directed toward creating a wholly integrated supply chain for engine parts - an area that demands advanced machining technologies - by supporting cooperative enterprises of the new company and forging an industrial cluster. With these various undertakings, the new company will progressively enhance its competitive strength and build a strong presence within the international markets. As the major shareholder of the new company, MHI will carry out its responsibility for the new company's business management and continue to provide support in material procurement and research & development activities, etc.

IHI has opted to make a modest capital investment into the new company, considering that the commissioned production of low-pressure turbine blades for the new company will be a long-term cooperation. IHI expects the production cooperation will further strengthen cost competitiveness of its world's leading blade production plants in Soma, Fukushima, through further enhancement of its capability in securing low-pressure turbine production volume with greater stability.

DBJ has supported Japan's aircraft industry over the course of roughly 30 years, tracing back to its predecessor before undergoing incorporation in 2008. In the present instance again, the bank is committed to providing backup support to strengthen the global competitiveness of Japan's aero engine industry, through provision of risk money to the new company, leveraging Fund for Japanese Industrial Competitiveness.

MHI, IHI and DBJ aim to work closely with the newly launching company and pledge to provide their full support to the new entity's business development.

- Overview of Investments into the New Company -

Capital increase sum: 11 billion yen (including 5.5 billion yen to be added to capital)

Capital before new investment: 500 million yen

Capital after new investment: 6 billion yen

Capital investment method: Third-party allocation of shares: 1 billion yen to IHI, 10 billion yen to DBJ

Payment date: October 1, 2014

- Overview of New Company -

Name: Mitsubishi Heavy Industries Aero Engines, Ltd.

Establishment: October 1, 2014 (date absorption-type split takes effect)

Head Office: 1200 Higashi-tanaka, Komaki City, Aichi Prefecture

Business: Engineering, manufacturing, marketing , maintenance, repair and overhaul of commercial aero engines

Ownership ratios: MHI 89%, IHI 1%, DBJ 10%

Capital: 6 billion yen

Representative: Katsuyuki Shimauchi, President

Revenues: Approx. 37 billion yen (FY2013)

Employees: Approx. 320

Subsidiary: MHI Aero Engine Service Co, Ltd. (maintenance, repair and overhaul of small size aero engines)

About Mitsubishi Heavy Industries

Since its foundation in 1884, Mitsubishi Heavy Industries (MHI) has sought pioneering new monodzukuri (manufacturing) techniques, building the foundations for the development of the entire industry. Today, with environmental and energy issues to the fore, MHI provides people around the world with eco-friendly products, and contributes to society through its involvement in global infrastructure projects and other business activities. For more information, please visit the MHI website at www.mhi.co.jp.



Source: Mitsubishi Heavy Industries

Contact:
Mitsubishi Heavy Industries
Hideo Ikuno
h.ikuno@daiya-pr.co.jp
+81-3-6716-5277


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