Mitsubishi Motors expects biggest loss in 16 years amid pandemic

Kyodo News

Posted at Jul 28 2020 02:38 AM

TOKYO - Mitsubishi Motors Corp. said Monday it is expecting a group net loss of 360 billion yen ($3.4 billion) for the current business year through March, its biggest loss in 16 years, due to slowing global sales following the novel coronavirus pandemic.

The Japanese carmaker, an alliance partner of Nissan Motor Co. and Renault SA of France, also said it will close its subsidiary's plant producing Pajero and Outlander sport utility vehicles in central Japan in the first half of 2021 as part of restructuring efforts.

The projected net loss for fiscal 2020 would be bigger than the previous year's 25.78 billion yen and also the largest since fiscal 2004, when it recorded red ink of 474.79 billion yen after incurring massive recall costs.

It expects an operating loss of 140 billion yen, against a profit of 12.79 billion yen in fiscal 2019, on sales of 1.48 trillion yen, down 34.8 percent.

For the first quarter ended last month, Mitsubishi Motors posted a combined net loss of 176.16 billion yen, compared with a net profit of 9.31 billion yen for the same period a year earlier. Its operating loss stood at 53.34 billion yen, a turnaround from a profit of 3.86 billion yen, on sales of 229.55 billion yen, down 57.2 percent.

The company logged a special loss of 120 billion yen following a write-off of impairment losses on fixed assets.

"We're facing a severe business environment that we've never experienced (due to the pandemic)," CEO Takao Kato said in an online press conference

Unveiling its business plan through fiscal 2022, the automaker said it will cut fixed costs by 20 percent or more through measures such as soliciting early retirements and reining in new recruitment. It will also focus its business resources on Southeast Asian countries, the company's core market.

Mitsubishi Motors has continued to manufacture the Pajero for overseas markets after finishing production for the domestic market last year, but it will halt all output of the SUV after closing its subsidiary's plant in Gifu Prefecture.

Production of the Outlander and other vehicles will be transferred from the plant to its factory in nearby Aichi Prefecture, the company said.