Mitsubishi Motors Announces FY2007 Full-year Results and FY2008 Forecasts
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Tokyo, Japan, Apr 25, 2008 - Mitsubishi Motors Corporation (MMC) today announced its full-year results for the year ending March 31, 2008, together with forecasts for the year ending March 31, 2009.
Mitsubishi Motors' consolidated sales for fiscal 2007 totaled 2 trillion 682.1 billion yen, a 22 percent increase of 479.2 billion yen over the previous fiscal year. Factors behind the improved performance include a 10 percent growth in global retail sales over fiscal 2006, the commencement of OEM vehicle supplies to PSA Peugeot Citroen and favorable yen exchange rates.
Mitsubishi Motors posted an operating profit of 108.6 billion yen, a 2.7-fold increase of 68.4 billion yen over the previous fiscal year. This significant improvement stems from growth in sales volume and a more profitable model mix in the company's Europe and Asia & Other regions, the aforementioned favorable exchange rate, and cost reductions. These together more than offset the higher sales costs accompanying the launch of new models in America and factors including reduced profit at the company's auto financial service operations in America last year.
Mitsubishi Motors posted an ordinary profit of 85.7 billion yen, a 4.6-fold year-on-year increase of 67.2 billion yen.
Mitsubishi Motors reported a net income of 34.7 billion yen, an improvement of 26.0 billion yen over fiscal 2006. Factors holding back an even greater improvement in the net position include operational restructuring costs stemming from the closure of the body assembly plant at Mitsubishi Motors Australia Ltd., the writing off of impairment losses in Japan and America.
Fiscal 2007 marks the second consecutive year that Mitsubishi Motors has posted surpluses at all levels (operating, ordinary and net profits) for the full financial year and indicates the company has achieved its aim of establishing a profitable financial and operating structure. In addition, both the operating and ordinary income figures for fiscal 2007 represent new highs in the history of the company.
Sales volume
Global retail sales of vehicles in fiscal 2007 totaled 1,359,000 vehicles, a 10 percent increase of 129,000 compared to the 1,230,000 sold in fiscal 2006.
In Japan, MMC sold 219,000 vehicles, a year-on-year decrease of 11 percent or 28,000 units in a difficult domestic market which showed no signs of recovery. The introduction of the Delica D:5, the new Galant Fortis sedan (Lancer in overseas markets) and Lancer Evolution X (Lancer Evolution in overseas markets) models during fiscal 2007 helped the company to record an increase in registered car (i.e. vehicles other than minicars) sales volume.
In North America, the company sold 172,000 vehicles, a 5.0 percent increase over fiscal 2006. Sales volume slipped during the second half of the year, impacted by the sub-prime credit crunch, which has brought greater uncertainty to the prospects for the American market, along with fiercer competition. But fast sales of the Outlander and Lancer models, particularly in the first half of the year, and a 51 percent increase in sales in Canada allowed the company to post the 5.0 percent increase for the full year.
In Europe, Mitsubishi Motors sold 341,000 vehicles, a strong 21 percent increase of 59,000 units. This growth was driven by continuing brisk business in Russia which saw a 54 percent year-on-year increase in sales to top 100,000 units for the year, by a doubling of sales in Ukraine for the second consecutive year, and by a strong 44 percent-plus increase in sales in the countries of Central Europe.
In Asia and other regions, Mitsubishi Motors sold 627,000 vehicles, a 17 percent increase of 90,000 units over the previous year. Firm sales of the Triton pickup and Pajero SUV in Latin America, the Middle East and Africa were complemented by increases in sales volume in Thailand, Indonesia, the Philippines and other countries in the Asia/ASEAN region.
Forecasts for fiscal 2008
1) Overview
In fiscal 2008 Mitsubishi Motors will aim for a 3 percent increase to 1,128,000 units in world market sales of built-up vehicles as it promotes sales of its global models. In light of declining export shipments of parts for assembly in North Asia and ASEAN nations, and expected declines in Japan and North America where demand is flat, the company forecasts total global retail sales volume of 1,309,000 units, 4 percent or 50,000 units down compared to fiscal 2007.
Regional sales forecasts are as follows. Japan: 207,000 vehicles, a 5 percent decrease of 12,000 over the previous year; North America: 145,000 vehicles, a 16 percent decrease of 27,000 due partly to the company's repositioning of Puerto Rican sales to its Asia and Other region; Europe: 388,000 vehicles, a 14 percent increase of 47,000; Asia & Other: 569,000 vehicles, a 9 percent decrease of 58,000 due in part to the impact of lower export shipments of parts to PROTON Holdings Berhad in Malaysia, which is to cease assembly of Mitsubishi based cars.
Given the decreases in sales volume outlined above and the adverse effect of the stronger Japanese yen, for fiscal 2008 Mitsubishi Motors forecasts net sales of 2 trillion 650 billion yen, a 1 percent decrease of 32.1 billion yen over fiscal 2007. The company predicts an operating profit of 60 billion yen, 48.6 billion yen down on fiscal 2007, this decrease being due to such profit- impacting factors as the substantial weakening of the Japanese yen and sharp increases in raw material costs. The company will minimize the impact of these factors with higher earnings from increased sales volumes and more profitable model mixes in its Europe and Asia & Other regions, as well as by reducing material costs and by implementing operational restructuring.
Mitsubishi Motors forecasts an ordinary profit of 48 billion yen, a year-on-year decrease of 37.7 billion yen, and a full-year net profit of 20 billion yen, 14.7 billion yen down on fiscal 2007.
2) Operational measures by region
Corresponding to the first year of Mitsubishi Motors' new Step Up 2010 mid-term business plan, fiscal 2008 will be a year in which the company will engage in measures and initiatives covering all areas of its activities including production, sales and alliances as it works to sesure steady progress in the primary aim of the plan, "Building the foundations of growth."
I. Japan - Strengthen lineup by introducing new models
The company plans to bring to market a new minicar wagon, the Galant Fortis sport hatchback model and a new small commercial vehicle.
Increase profitability in new models
Increase percentage of dealership sales by boosting sales skills and
abilities.
Increase customer loyalty, long-term Mitsubishi ownership
Improve after-sales service products and increase customer satisfaction
through better care and people skills.
Increase efficiency of sales structure
Build high-efficiency sales network and open regional stores to attract
customers.
II. North America - Strengthen new Lancer series lineup.
Add Lancer Evolution with Twin Clutch SST (Sport Shift Transmission) automated manual transmission, Lancer Ralliart and a Lancer sport hatchback model to lineup.
- America
Continue measures designed to reinvigorate the dealer network. Continue cost-cutting programs at the local production facility. Expand export destinations for locally built models.
- Canada
Expand sales network and strengthen after-sales service structure.
III. Europe - Strengthen new Lancer series lineup
Add Lancer Evolution and Lancer sport hatchback to lineup.
- Western Europe
Introduce low-CO2 emission Colt model with "idling stop" feature.
- Central Europe
Expand sales of SUV models.
Transfer production of Europe-bound models from Okazaki and Mizushima
Plants to NedCar.
Europe-bound Outlander
New SUV for PSA Peugeot Citroen
Expand sales network in Russia, Ukraine
Russia: From 106 outlets in FY07 to 126 outlets in FY08
Ukraine: From 50 outlets in FY07 to 65 outlets in FY08
IV. Asia and other regions - China
Expand built-up import car operations; maintain Mitsubishi brand sales network.
- Korea
Consider entry into built-up car import business.
- Thailand
Strengthen production structure with establishment of new engine
factory.
Start production and export of pickup truck-based SUV model.
- Latin America, Middle East and Africa
Establish company in overall control of sales, marketing, parts and after-sales services. (Latter half of 2008)
- Australia Beef up built-up import lineup.
Mitsubishi Motors financial results at mitsubishi-motors
Mitsubishi Motors
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 .