Mitsubishi Motors Announces FY2006 First Half Financial Results and Forecasts for the Full Year
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Tokyo, Japan, Oct. 30, 2006 - JCN Newswire reported that Mitsubishi Motors Corporation today announced first half results for fiscal year 2006, ending March 31, 2007, and outlined its forecasts for the full year.
The Company posted consolidated net sales of 1,005.4 billion yen for the first half of fiscal year 2006 (April 1 through September 30, 2006), an increase of 14.1 billion yen over the same period last year (991.3 billion). This increase was partially due to exchange rates despite lower sales volume in Asia and other regions and reduced OEM supply volume in non-domestic markets.
Mitsubishi Motors posted an operating loss of 5.5 billion yen, an improvement of 14.3 billion yen over the same period last year despite lower global sales volume. Factors contributing to the improvement were mainly improved sales and model profitability mix in Japan and North America, improvement of earnings in the U.S. financial service operation, and effects of a weaker yen.
The Company posted an ordinary loss of 13.2 billion yen, a year-on-year improvement of 20.4 billion yen, and a net loss of 16.1 billion yen, a year-on-year improvement of 47.7 billion yen. The improvement in net loss resulted from lower asset impairment charges taken in Japan compared to that taken in fiscal year 2005, the absence of restructuring charges booked last year, and extraordinary gains from the dissolution of a special purpose entity related to monetization of real estate assets in Japan.
Global retail sales volume in the first half of fiscal year 2006 totaled 599,000 units, a reduction of 60,000 compared to 659,000 in the same period last year.
Despite falling demand in Japan, Mitsubishi Motors sales volume grew 6,000 vehicles to 114,000. Seventeen consecutive months of year-on-year increases (since May 2005) underscore this achievement, showing steady growth.
In North America, the company's policy to strengthen the dealers' sales capabilities is gradually bearing fruit. Volume in the region grew 3,000 vehicles to 84,000, the first half fiscal year period of year-on-year growth since the first half of fiscal 2002 (eight periods).
In Europe, volume in Germany, the UK and other markets fell slightly year-on-year. However, in addition to continued robust sales in Russia, sales volume doubled in the Ukraine, bringing the total for the region to 142,000 vehicles, 11,000 more than the same period last year.
In Asia and other regions, markets in Latin America, the Middle East, and Africa showed increased sales volume. However, sales fell in Indonesia on high fuel prices due to elimination of government subsidies and tighter credit conditions. Sales also fell in Malaysia, where shipments of production parts and components to Proton Holdings Berhad were reduced, and in Taiwan where overall demand fell. Overall volume on the whole was down 80,000 vehicles to 259,000.
Full-year forecast
Despite severe market conditions, The first half of fiscal year 2006 showed year-on-year improvement in net sales and distinct improvement in earnings. Although targets for net sales and unit sales volume did not meet the figures announced at the beginning of the financial year, losses were reduced in excess of targets.
While the sales climate is expected to remain difficult in the coming period, by steadily executing measures in the second half, the company will strive to achieve net sales and earnings goals as announced on April 27, 2006.
However, as a result of reviewing the unit sales volume targets by region, the company has opted to revise its fiscal 2006 sales volume to 1,322,000 vehicles, a reduction of 86,000 compared to the April 27th figure. In Japan, reflecting the fact that unit sales volume was below forecast in the first half, the company has opted to revise volume to 281,000 vehicles, a reduction of 21,000 compared to the April 27th figure. In North America, the company has revised volume up 7,000 vehicles to 188,000 reflecting the effect of new model launches in the second half. Sales in Europe's growth markets are expected to grow as they did in the first half; the company has revised volume up 9,000 vehicles to 280,000 for the region. On the other hand, in Asia and other regions, the company has revised volume downward 81,000 vehicles to 573,000 reflecting the severe environment and uncertain outlook for markets in the region.
Operational initiatives for the second half of FY2006 (by region) 1) Japan - Introduce the fully redesigned Pajero and DelicaD:5, as well non-turbo versions of "i" - Increase dealer traffic through a new advertising campaign - Strengthen sales capabilities together with dealers - Build a new organizational structure, continue revamping the sales operation 2) North America - Increase buyer appeal and sales through introduction of the new Outlander and Lancer models - Reinforce sales capabilities via dealer training - Effective advertising focusing on Mitsubishi's 25 years in the U.S. market - Enhance sales through effective use of financial service operations - Improve productivity at the Illinois plant 3) Europe - Strengthen lineup through consecutive launch of new SUV models (new L200, Pajero, Outlander) - Expand sales in Russia and the Ukraine 4) Asia and other regions - China: Expand sales of Mitsubishi brand vehicles after the recent equity investment in South East (Fujian) Motor Co., Ltd and reinforce the lineup of vehicles exported from Japan - Thailand: Secure stable profitability through expansion of Triton/L200 1-ton pickup exports - Latin America, the Middle East and Africa: Sustain momentum through introduction of the new Pajero - Australia: Launch 3 new models (Triton, Pajero, Outlander) About Mitsubishi Motors Corporation Mitsubishi Motors Corporation was established in 1970 and is one of the few automobile companies in the world that produces a full line of automotive products ranging from 660-cc mini cars and passenger cars to commercial vehicles and heavy-duty trucks and buses. The company also operates consumer financing services and provides this to its customer base. For more information, please visit www.mitsubishi-motors.com. For further information, please visit the Mitsubishi Motors Corporation home page at: www.mitsubishi-motors.co.jp <http://www.mitsubishi-motors.co.jp>