Mitsubishi Motors Announces FY2008 Full-year Results and FY2009 Forecasts

(1) Fiscal 2008 overview
MMC's consolidated net sales for fiscal 2008 totaled 1 trillion 973.6 billion yen, a 26 percent de-crease of 708.5 billion yen over the previous fiscal year. Factors behind the drop in net sales include reduced worldwide unit sales and the appreciation of the yen against other world currencies.

MMC posted an operating profit of 3.9 billion yen, a drop of 104.7 billion yen over the previous fiscal year. Reduced unit sales and the effects of the strong yen were the principal factors in the lower profit figure but the company managed to stay in the black thanks to company-wide cost-cutting activities and the benefits stemming from the operational restructuring implemented last fiscal year.

MMC posted an ordinary loss of 14.9 billion yen, 100.6 billion yen worse than that of last year, as the drop in operating profit outweighed improvements in net interest and foreign exchange gains/losses.

MMC reported a net loss of 54.9 billion yen, 89.6 billion yen worse than fiscal 2007. The company booked extraordinary losses which included an impairment loss of 27.5 billion yen.

(2) Unit sales
Global retail sales in fiscal 2008 totaled 1,066,000 vehicles, a 22 percent decrease of 294,000 units on the 1,360,000 sold in fiscal 2007. Amid the global slump in demand, year-on-year unit sales were down in all the company's regional markets.

In Japan, MMC sold 168,000 vehicles in fiscal 2008, a 23 percent decrease of 51,000 units. The company strived to boost sales by introducing the new Toppo and other mini car models in the fall and the Galant Fortis Sportback (Lancer Sportback outside Japan) in December but was unable to counteract the sharp decline in overall demand suffered by the Japanese market in the second half of fiscal 2008.

In North America, the company sold 119,000 vehicles, a 26 percent decrease of 41,000 units over last year. While a 6 percent year-on-year increase in sales in Canada, where the record sales was achieved in March, sales in the United States were impacted by the slump in overall demand and slipped 32 percent or 40,000 units to a total of 84,000.

In Europe, MMC sold 272,000 vehicles, a 20 percent decrease of 69,000 units over fiscal 2007 as the drop in overall demand in the countries of Western Europe was compounded by a sudden slump in the second half of the year in Russia where sales had been solid up untill then.

In Asia and other regions, MMC sold 507,000 vehicles, a 21 percent decrease of 133,000 units over the previous year. While sales in Brazil, Indonesia and the Philippines increased over fiscal 2007, the rise failed to offset the ending of supplies of production parts to Proton in Malaysia and the slump in overall demand in other countries in the region.

MMC forecasts global retail unit sales of 932,000 vehicles for fiscal 2009, 13 percent or 134,000 units fewer than fiscal 2008, as it expects the current difficult global market climate to continue.

By region MMC forecasts sales in Japan of 195,000 vehicles, a 16 percent increase of 27,000 units over the previous year as the government's emergency measures to stimulate the economy start to kick in. The company expects sales elsewhere to slip, however, with forecasts of 92,000 units for North America, 22 percent or 27,000 units down; 213,000 units for Europe, 22 percent or 59,000 units down; and 432,000 units for Asia and Other, 15 percent or 75,000 units down.

Given the decreases in sales volume outlined above and the adverse effect of the stronger Japanese yen, for fiscal 2009 MMC forecasts net sales of 1 trillion 500 billion yen, a decrease of 473.6 billion yen over fiscal 2008.

The company will, however, make every effort to improve its earnings performance by cutting costs and expenses to a level commensurate with its current net sales. The company will be aiming to save more than 150 billion yen: by the measures including cutting sales and marketing expenses through maximizing the effectiveness of its advertising and publicity; by exploiting the benefits stemming from falling raw material prices and by strengthening efforts to reduce material costs; and by reducing labor costs and streamlining the functions of overseas subsidiaries.

MMC forecasts an operating profit of 30 billion yen, a year-on-year improvement of 26.1 billion yen, an ordinary profit of 15 billion yen, an improvement of 29.9 billion yen, and a full-year net profit of 5 billion yen, 59.9 billion yen improvement from fiscal 2008.