Mitsubishi says back in black, 1st time in 3 yrs

TOKYO, May 8 Reuters reported: that Mitsubishi Motors Corp said today it returned to the black in the business year just ended -- the first profit in three years for the beleaguered Japanese automaker as it restructures.

Japan's fourth-largest automaker declined to give a figure but the comment followed a report by Jiji news agency that Mitsubishi's group net profit may have exceeded 10 billion yen ($78.03 million) for the year ended in March.

"We expect to have returned to profit," a Mitsubishi spokesman said.

That compares with a steep loss of 278.14 billion yen the previous year and statements from Chief Executive designate Rolf Eckrodt in March that the company would at least meet its own break-even target.

Jiji, quoting unidentified sources, said Mitsubishi would exceed its own November targets of an operating profit of 35 billion yen and a recurring profit of 10 billion yen.

The profit for Mitsubishi, 37 percent owned by German-U.S. auto giant DaimlerChrysler AG (XETRA:DCXGn.DE - news; NYSE:DCX - news), was at the higher end of analysts' expectations.

A Reuters poll of six analysts showed three expected Mitsubishi to show a profit of between 13 billion yen and 16 billion yen as aggressive cost-cutting and a weaker yen offset a lack of new products and the lingering effects of a customer complaints cover-up scandal.

Of the other three analysts, one expected the company to break even and two saw a small loss.

STOCK SOARS THIS YEAR

Mitsubishi is due to announce its earnings results on Monday at 11.20 a.m. (0220 GMT).

The report and Mitsubishi's subsequent confirmation of a profit, pushed the already outperforming stock higher, closing up 5.19 percent at 385 yen, compared with a 1.81 percent gain by the Nikkei 225 share average.

The stock has been the strongest performer among Japan's big five automakers for the year to date, soaring some 73 percent.

Driving the climb has been Eckrodt's promotion to CEO from chief operating officer, formally to take place in June and DaimlerChrysler CEO Juergen Schrempp's statement in a magazine interview that his firm planned in the long-term to take a majority stake in Mitsubishi.

Schrempp reiterated, however, that Mitsubishi had to become profitable and must cut its 1.3 trillion yen debt pile before DaimlerChrysler would raise its stake to above 50 percent.

Despite the stock's sky-high climb this year and better prospects this business year, analysts say large question marks still hang over the company's long-term success.

Its U.S. unit looks strong and will benefit from the full year impact of cost-cutting efforts but analysts say they are worried that Mitsubishi's long-awaited new compact car will be heading into a crowded market segment in Japan.

Still suffering from the lingering effects of the customer complaints cover-up scandal in July 2000 that resulted in the recall of nearly two million vehicles worldwide, the success of the new Z-car compact, is seen as crucial.

"There's a lot of pressure on them to pull this off without incident," said Kurt Sanger, auto analyst at ING.

"Its not only important for their financial health but also for their brand."