Mitsubishi Motors has forecast a sharp slowdown in profit growth this year, warning of an earnings drop in the key US market and a long haul before it breaks even at home, Reuters reported.
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Mitsubishi, owned 37% by DaimlerChrysler, said it expected group operating profit to rise 8.7% to 90 billion yen ($US770 million) in the year to next March, in line with analysts’ forecasts, Reuters said, noting that the restructuring company reported operating profit growth of 106% in the just-completed financial year.
The earnings for last year include those at its overseas subsidiaries over the past 15 months due to a change in accounting periods. The forecasts for this year exclude the Fuso truck unit, which was spun off in January, Reuters said, adding that, excluding the accounting changes and the spin-off of the truck unit, operating profit at Mitsubishi was forecast to rise 7.1%.
According to Reuters, Mitsubishi is undergoing a wholesale revision of the way it does business in the United States after it realised that its youthful customer base contained a significant percentage that did not pay their bills.
Mitsubishi said it has changed top management at its finance unit, is focusing on credit-worthy clients and is stepping up debt recollection after it had to book a special 36 billion yen credit loss in the last business year, Reuters said.
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By GlobalDataThe news agency noted that Mitsubishi’s US sales have been one of its few sources of profit in the past few years and analysts have voiced concern over its recent slide in sales.
According to Reuters, Mitsubishi said that while it expected retail sales in Japan to increase by some 46,000 units this year, it would be another two years before the company broke even in its home market but vehicle sales to Asia were expected to increase while European operations would turn a profit.
Mitsubishi expects a net profit of 40 billion yen this year on sales of 2.9 trillion yen, Reuters said.
