Lower costs and currency gains allowed Mitsubishi Motors Corporation to book better than expected first-half results for fiscal year 2006.
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Although the automaker, recivering from recall scandals in Japan, posted an operating loss of 5.5bn yen, it was an improvement of 14.3bn yen over the same period last year despite lower global sales volume.
Improved sales and model profitability mix in Japan and North America, improvement of earnings in the US financial service operation, and the effects of a weaker yen were the main contributing factors.
MMC posted consolidated net sales of 1,005.4bn yen for the first half to 30 September, 2006, an increase of 14.1bn yen over the same period last year (991.3bn). 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.
The automaker posted an ordinary loss of 13.2bn yen, a year-on-year improvement of 20.4bn yen, and a net loss of 16.1bn yen, a year-on-year improvement of 47.7bn yen.
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By GlobalDataThe 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 related to real estate assets in Japan.
Global retail sales volume in the first half of fiscal year 2006 was down 60,000 to 599,000 units.
Despite falling demand in Japan, volume there grew 6,000 to 114,000.
North America volume 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.
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.
“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,” Mitsubishi said in a statement.
“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.”
After reviewing unit sales by region, MMC has revised its fiscal 2006 sales forecast down 86,000 units to 1,322,000 vehicles.
In Japan, reflecting the fact that unit sales volume was below forecast in the first half, the company has opted to revise volume down 21,000 to 281,000 vehicles.
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.
In Asia and other regions, the company has revised volume downward 81,000 vehicles to 573,000 reflecting the severe environment and uncertain outlook.
