Mitsubishi Motors loses $4.39 billion, more losses ahead
By Chang-Ran Kim / Reuters
TOKYO - Hit by plunging sales in the United States and Japan, Mitsubishi Motors Corp. (MMC) sank deeper into the red last year and projected another year of loss on Monday as it struggles to patch up its brand image.
While other Japanese auto makers are cruising past the competition overseas, MMC is battling a tattered reputation from a high-profile series of recalls and arrests of former executives after it concealed safety-related defects from authorities.
The decades-long practice first came to light in 2000 and resurfaced last year when at least two road deaths were linked to hidden defects in trucks made by its then-unit Mitsubishi Fuso Truck and Bus Corp.
MMC's group net loss for the year to March 31 more than doubled to 474.79 billion yen ($4.39 billion) from 215.42 billion yen, in line with expectations, as restructuring costs and provisions for asset impairment charges rose.
Its operating loss widened to 128.54 billion yen from 96.85 billion yen, slightly better than a mean estimate of 135 billion yen in a survey of nine analysts by Reuters Estimates.
MMC, owned 13 percent by DaimlerChrysler AG, is alone among Japanese car makers in posting a loss. Most domestic rivals, including Toyota Motor Corp., Nissan Motor Co., Honda Motor Co. and Mazda Motor Corp., reported record-high earnings for 2004/05.
Revenues shrank 16 percent to 2.123 trillion yen as slight growth in Europe, helped by the new Colt compact car, and Southeast Asia were overwhelmed by a drop nearly everywhere else.
Global sales fell 14 percent to 1.313 million vehicles last year, with volumes in Japan plunging 37 percent to 227,000 units.
"We want to recover the 300,000-unit level during the 2006/07 business year," Chief Financial Officer Hiizu Ichikawa told a news conference.
For the current business year to March 2006, the maker of the Pajero sport utility vehicle expects a net loss of 64 billion yen and an operating loss of 14 billion yen -- unchanged from forecasts made under a revitalisation plan unveiled in January.
But MMC said steps to reverse the sales slide such as offering more generous warranties and after-sales service were paying off, especially in Japan, where the recall scandal has taken the heaviest toll.
For this business year, MMC lifted its domestic sales forecast to 253,000 units from the 224,000 projected in January.
U.S. sales, meanwhile, should end a more than two-year monthly slide as the new Eclipse sports car -- launched last week one month ahead of schedule -- lures customers back to its showrooms, MMC said.
"Looking ahead we're anticipating good numbers in North America," President Osamu Masuko said. "Showroom traffic should rise, and that should help lift sales of other models too."
MMC kept its North American sales target at 184,000 units for this business year, but officials said actual volumes would likely exceed that figure.
"In my mind, that is our minimum (targeted) volume," Rich Gilligan, Chief Executive of Mitsubishi Motors North America, told reporters in Tokyo.
Gilligan said MMC planned to roll out six new models in the United States over the next 26 months, including the Raider mid-size pickup truck after a 10-year hiatus from that segment.
MMC forecast revenues to grow 4.6 percent to 2.22 trillion yen in 2005/06, on an expected 4.3 percent rise in volumes to 1.37 million vehicles.
Shortly after former majority owner DaimlerChrysler gave up on its rehabilitation last April, MMC received a $4.8 billion bailout from the Mitsubishi group, investment funds and others, and another lifeline totalling $5.25 billion early this year to shore up its balance sheet and develop new cars.
MMC has projected a return to profit in the financial year ending in March 2007.
Someone please just dig the Grave!
By Chang-Ran Kim / Reuters
TOKYO - Hit by plunging sales in the United States and Japan, Mitsubishi Motors Corp. (MMC) sank deeper into the red last year and projected another year of loss on Monday as it struggles to patch up its brand image.
While other Japanese auto makers are cruising past the competition overseas, MMC is battling a tattered reputation from a high-profile series of recalls and arrests of former executives after it concealed safety-related defects from authorities.
The decades-long practice first came to light in 2000 and resurfaced last year when at least two road deaths were linked to hidden defects in trucks made by its then-unit Mitsubishi Fuso Truck and Bus Corp.
MMC's group net loss for the year to March 31 more than doubled to 474.79 billion yen ($4.39 billion) from 215.42 billion yen, in line with expectations, as restructuring costs and provisions for asset impairment charges rose.
Its operating loss widened to 128.54 billion yen from 96.85 billion yen, slightly better than a mean estimate of 135 billion yen in a survey of nine analysts by Reuters Estimates.
MMC, owned 13 percent by DaimlerChrysler AG, is alone among Japanese car makers in posting a loss. Most domestic rivals, including Toyota Motor Corp., Nissan Motor Co., Honda Motor Co. and Mazda Motor Corp., reported record-high earnings for 2004/05.
Revenues shrank 16 percent to 2.123 trillion yen as slight growth in Europe, helped by the new Colt compact car, and Southeast Asia were overwhelmed by a drop nearly everywhere else.
Global sales fell 14 percent to 1.313 million vehicles last year, with volumes in Japan plunging 37 percent to 227,000 units.
"We want to recover the 300,000-unit level during the 2006/07 business year," Chief Financial Officer Hiizu Ichikawa told a news conference.
For the current business year to March 2006, the maker of the Pajero sport utility vehicle expects a net loss of 64 billion yen and an operating loss of 14 billion yen -- unchanged from forecasts made under a revitalisation plan unveiled in January.
But MMC said steps to reverse the sales slide such as offering more generous warranties and after-sales service were paying off, especially in Japan, where the recall scandal has taken the heaviest toll.
For this business year, MMC lifted its domestic sales forecast to 253,000 units from the 224,000 projected in January.
U.S. sales, meanwhile, should end a more than two-year monthly slide as the new Eclipse sports car -- launched last week one month ahead of schedule -- lures customers back to its showrooms, MMC said.
"Looking ahead we're anticipating good numbers in North America," President Osamu Masuko said. "Showroom traffic should rise, and that should help lift sales of other models too."
MMC kept its North American sales target at 184,000 units for this business year, but officials said actual volumes would likely exceed that figure.
"In my mind, that is our minimum (targeted) volume," Rich Gilligan, Chief Executive of Mitsubishi Motors North America, told reporters in Tokyo.
Gilligan said MMC planned to roll out six new models in the United States over the next 26 months, including the Raider mid-size pickup truck after a 10-year hiatus from that segment.
MMC forecast revenues to grow 4.6 percent to 2.22 trillion yen in 2005/06, on an expected 4.3 percent rise in volumes to 1.37 million vehicles.
Shortly after former majority owner DaimlerChrysler gave up on its rehabilitation last April, MMC received a $4.8 billion bailout from the Mitsubishi group, investment funds and others, and another lifeline totalling $5.25 billion early this year to shore up its balance sheet and develop new cars.
MMC has projected a return to profit in the financial year ending in March 2007.
Someone please just dig the Grave!
