Mitsubishi Fuso Truck and Bus Corporation: Preliminary Evaluation of Expenses Related to Quality-Enhancing Measures and Recall Campaigns
* Extraordinary impact on the Commercial Vehicles Division's operating profit expected to amount to around euro 400 million in the third quarter 2004 -- more than compensated for by very positive results in other business units within the Division
* Operating profit of the Commercial Vehicles Division expected to clearly exceed last year's figures despite the extraordinary impact in 2004
* MFTBC pressing ahead with its rapid and all-encompassing business renewal with the support of DaimlerChrysler
STUTTGART, Germany and TOKYO, Oct. 8 -- Mitsubishi Fuso Truck and Bus Corporation (MFTBC), a company in which DaimlerChrysler owns a majority holding, has drawn up a preliminary evaluation of the expenses required for quality-enhancing measures and recall campaigns. The extraordinary impact on the operating profit of the Commercial Vehicles Division of around euro 400 million in the third quarter of 2004 can be more than compensated for by the very positive trend in the results of the other business units within the Commercial Vehicles Division.
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DaimlerChrysler therefore continues to expect that the operating profit of the Commercial Vehicles Division for the year 2004 will clearly exceed last year's results despite the extraordinary earnings impact.
With the support of DaimlerChrysler, the German-Japanese management of MFTBC is currently pressing ahead with a rapid and all-encompassing business renewal at the company. MFTBC announced in June 2004, that it would systematically disclose and rectify mistakes made in the past, after the company's new quality management system and thorough investigations had brought to light numerous cover-ups dating from the time before DaimlerChrysler's acquisition of a holding in Mitsubishi Motors Corporation (MMC). As a result, several recall campaigns were launched, that to date have involved some 525,000 vehicles in Japan, some of them several times.
In accordance with the shareholding structure, DaimlerChrysler will have to bear 65 percent of the costs being incurred by MFTBC; the remaining 35 percent being borne by the minority shareholders of MFTBC. For DaimlerChrysler, this results in an extraordinary impact of around euro 400 million for the operating profit of the Commercial Vehicles Division in the third quarter of 2004. In addition to that, euro 70 million had already been accrued and impacted operating profit in the second quarter of 2004. Furthermore, accruals not affecting the operating result are being set up within the framework of the first time consolidation of MFTBC.
MFTBC was a corporate unit of MMC before DaimlerChrysler acquired a 43 percent holding in March 2003. On the basis of the underlying contracts and this preliminary evaluation of the situation at MFTBC, DaimlerChrysler is investigating the relevance and extent of bringing forward a claim against MMC, as announced.
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