Mitsubishi’s Loss Widens as Sales Drop 16%
Mitsubishi Motors Corp.’s loss widened to $4.4 billion and sales tumbled 16% for the latest fiscal year as the Japanese automaker struggled to regain customer trust in the wake of a defect coverup scandal in Japan. It expects to post a smaller loss for the current fiscal year as sales pick up in Japan and overseas.
The Tokyo-based company’s loss of 474.8 billion yen for the year ended March 31 was its second straight year in the red, and its loss was more than twice as large as its loss of 215 billion yen ($2 billion) the previous fiscal year.
The loss reported Monday was slightly larger than the company had forecast in January.
Sales fell to 2.1 trillion yen ($19 billion) from 2.5 trillion yen a year earlier. The number of vehicles sold fell to 1.31 million from 1.5 million the previous year.
Mitsubishi Motors has seen its Japan sales plunge after acknowledging five years ago that it had systematically hidden auto defects to avoid recalls. Despite one revival plan after another, the scandals have recurred, tarnishing its brand image in Japan. It has also been battered by its practice of overly extending loans to buyers with bad credit in the United States.
Mitsubishi Motors foresees more tough times ahead. It forecast a loss of 64 billion yen for the fiscal year through March 2006 on sales of 2.2 trillion yen.
But President Osamu Masuko said that sales in Japan were picking up -- on target for fiscal 2004 at 227,000 vehicles -- and that they were expected to rise to 253,000 in the current fiscal year.
“It’s a small step, but we are confident it’s a definite step,” he said at the company’s Tokyo headquarters.
Vehicle sales were also expected to grow in North America, Europe and Asia, with global sales rising to 1.37 million vehicles in fiscal 2005, Mitsubishi said. North American vehicle sales are expected to edge up to 184,000 in fiscal 2005 from 174,000 last year.
Although vehicle sales have dropped in North America, Rich Gilligan, head of Mitsubishi’s U.S. operations, said the Eclipse coupe due out in May was expected to reverse that slide as showroom traffic recovered.
The new Raider pickup is also set to be introduced this year, and other models are in the works, Gilligan said.
The plant in Normal, Ill., will begin producing vehicles for export to the Middle East and Russia next year, and Gilligan said he was considering producing vehicles for export to South America. The U.S. business is expected to become profitable in fiscal 2006, he said.
“The new strategy is going to be about the car as the star,” he said. “It will be a much heavier focus on the product. As we rebuild the brand, it will be one product at a time.”
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Higher Prices Help Campbell Post Profit
Campbell Soup Co. said fiscal third-quarter profit rose 3% on lower promotional spending and higher prices.
Net income for the period ended May 1 climbed to $146 million, or 35 cents a share, from $142 million, or 34 cents, a year earlier, Camden, N.J.-based Campbell said. Sales increased 4% to $1.74 billion, helped by a decline in the U.S. dollar.
