Mitsubishi Motors 1st half profit increase

Mitsubishi Motors Corporation has announced a Net Profit of 12.8 billion Yen; this represents a year-on-year improvement of 18.4 billion Yen and importantly the first profit for the first half since the 2002 Financial Year.

Consolidated net sales of 1,214 billion Yen for the fist half of the 2008 fiscal year (April 1 – September 30th 2008) is an 8% decrease of 99.4 billion Yen compared to last year (1,313.4 billion Yen). The increased revenues from a more profitable model mix helped to counter act the fall in unit sales and the stronger Yen.

Despite the increase in the cost of raw materials and the impact of the stronger Yen operating income of 25.4 billion Yen is a 35% increase of 6.6 billion Yen compared to last year. This was achieved due to the following factors:

A more profitable model mix

Reductions in Selling and Marketing

Higher operating income, favourable changes in the balance of interest paid and received and improved gains in foreign exchange transactions helped ordinary income increase by 14.3 billion Yen to 20.9 billion Yen.

Global Sales Down

There has been a 13% decrease equalling 89,000 units for the 1st half of fiscal 2008. The total sales are at 602,000 vehicles compared to 691,000 units for the same period last year.

With the global sales down, Mitsubishi have announced the following regarding unit sales compared to last year:

Japan – 83,000 vehicles = 17% decline,
Reason: Due to intensifying competition and new models were only introduced in September

North America – 71,000 vehicles = 22% decline,
Reason: Attributed by a deterioration in consumer confidence and credit crunch

Europe – 168,000 vehicles = increase from last year,
Reason: Due to higher sales in Russia and Ukraine

Asia & other regions – 280,000 vehicles = 15% decrease,
Reason: Due to ending the supply of parts for local vehicle assembly

World-Wide Financial Turmoil

Following the first half results and the current sales climate Mitsubishi Motors has revised the full-year forecasts that were announced on April 25th 2008.

The revision has taken place in anticipation of significantly slower sales in all markets following the world-wide financial turmoil and slowdown in the global economy. The forecast is as follows:

Net Sales down 290,000,000,000 Yen (£1,774,469,878)
Operating Income down 10,000,000,000 Yen (£61,228,609)
Ordinary Income down 5,000,000,000 Yen (£30,611,909)

New Initiatives

Mitsubishi Motors will focus all its efforts on reviewing its work processes and renew its efforts to reduce costs. Specific focus will be made on the promotion of “building on our strengths” and “revise work processes” policies.

Initiatives in mature markets will differ to those in emerging markets. Mitsubishi Motors will be adding more low-CO2 emission models to the line-up and will aim to raise capacity utilisation at the European production hub. In Japan they will be strengthening their after-sales services and maximise efficiencies in the sales network. New models will be released to Russia, Ukraine, Middle East and Brazil.