Mitsubishi Motors reports worst ever loss

Friday, May 18, 2001 at 09:20 JST TOKYO — Scandal hit Japanese automaker Mitsubishi Motors Corp on Friday reported its worst ever loss in the business year to March, revealing the extent of the task it faces in turning its business around.

But Japan's fourth largest automaker reaffirmed plans for a recovery in the current year to next March, forecasting it would break even in current earnings terms for the first time in five years.

The hefty cost of widespread restructuring mapped out under the guidance of US-German DaimlerChrysler AG also deepened the losses, the company said.

Its group net loss for the year that ended on March 31 ballooned to Y278.14 billion from Y23.33 billion a year earlier, in line with the company's March forecast of Y270 billion.

The Tokyo based automaker attributed the red ink to flagging domestic sales in the wake of the recall of 1.52 million cars worldwide after it admitted to hiding defects and customer complaints for more than two decades.

In a fresh blow to its reputation, Mitsubishi Motors said on Thursday it was recalling another 203,635 cars in Japan due to potential defects in their fuel tanks. It estimated the cost of the latest recall at Y4 billion.

The hefty cost of widespread restructuring mapped out under the guidance of US-German DaimlerChrysler AG (DCX) also deepened the losses, the company said.

For the year to next March, Mitsubishi Motors expects its group net profit and group current profit — which is pre-tax and includes gains and losses on securities investments and non-operating activities — to break even.

Its group current loss for last year came in at Y94.06 billion.

Some analysts doubt it can break even this year as promised, given no clear signs of a bottoming out in its domestic sales.

Moreover, synergies from the collaboration with Daimler, which is raising its stake to 37.3% from 34%, are not expected to flow through until 2003 or 2004.

Mitsubishi Motors' results contrasted with those of Nissan Motor Co Ltd, which is being restructured under the guidance of controlling minority shareholder Renault SA of France. Nissan reported a sharp profit recovery on Thursday, confirming that deep cost cutting is bearing fruit. (Reuters News)

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-- Martin Thompson (mthom1927@aol.com), May 19, 2001