MMC posts first profit in three years

DESPITE sales problems in Australia, Mitsubishi Motors Corporation (MMC) has posted a $US59 million ($A78 million) operating profit for the first time in three years.

However, as it released financial details last week MMC stuck to its earnings targets for the next two years as it struggles to restore its key US business.

In better-than-expected annual results, the company said the profit figure was driven by cost cuts, a softer yen, as well as smaller warranty and marketing spending.

The year before, the Japanese-based car-maker reported a loss of $1.12 billion ($A1.5 billion).

Domestic Japanese sales have improved thanks to the new Outlander 4WD and "i" mini-car, but demand in the US, where Mitsubishi once made most of its money, has sunk almost every month in the past year.

Underscoring strong domestic sales for the Outlander, Tokyo-based Mitsubishi said it would continue operations at its Okazaki plant in western Japan, producing the SUV model along with another Japanese factory that is running at full capacity.

The Okazaki site had been slated for eventual closure.

MMC president Osamu Masuko said Mitsubishi would also aim to improve capacity utilisation at other factories around the world, mainly through exports.

As well as planned exports of the US-made Galant sedan to the Middle East and other regions, Mr Masuko said its Dutch plant would export the Colt to Mexico and South Africa.

Mr Masuko added that France’s PSA/Peugeot-Citroen, for which Mitsubishi is scheduled to supply the Outlander rebadged as a Peugeot from next year, wants to raise its initially agreed order of 30,000 units a year.

But demand for Mitsubishi’s cars has so far undershot plans in the US, Australia and Taiwan, capping its global retail sales for the year that ended on March 31 at 1.34 million units, or 26,000 units short of its target.

For the year to March 2007, Mitsubishi forecast an operating profit of $US374.2 million ($A493m) and a net profit of $US69.6m ($92m), which remain unchanged from its plan announced in January 2005.

Total global production totalled 133,366 units, a year-on-year increase of 2.1 per cent while Japanese production of 81,094 units represented a 33.6 per cent increase from the year ago period.

Total vehicle sales in Japan were 48,600 units, a strong 10.5 per cent increase over March 2005 due to continued strength in the new models Outlander and "i".

March was the 11th consecutive month of year-on-year sales increase for the domestic market, a testament to the solid recovery being seen in the Japanese market.

Total sales for passenger cars came to 35,987 units, a robust 20.8 per cent increase over the volume for March 2005, while commercial vehicle sales fell to 12,613 units, or 88.9 per cent of the year ago period total.

Overseas production declined to 52,272 units, or 74.8 per cent of March 2005 production.

European production totalled 7948 units, 112.6 per cent of the year ago level, and Asian production totalled 33,631 units, 64.3 per cent of the total for the previous period.

North American production came to 8460 units, 107.4 per cent year-on-year due to production ramp up of the new Eclipse Spyder convertible.

Total exports from Japan increased 75.5 per cent over March 2005 to 48,145 units.

Exports to Europe increased to 17,839 units, a 76.9 per cent gain year-on-year, due to continued robust sales growth in Russia.

Exports to Asia rose to 5150 units, or 88.0 per cent above the export volume in the same period last year, while exports to the North American market fell 32.8 per cent of the volume for March 2005 due to efforts to decrease dealer inventories.