TOKYO - Mitsubishi Motors Corp. and Nissan Motor Co., the Japanese auto companies in the most difficulty, suffered huge losses on overseas operations for the fiscal year ending 31 March and had only weak sales at home.
Nissan reported a loss of $106 million, after a profit of $588.5 million the previous year. The company has lost money in five of the last six years. This year, Nissan lost more than $680 million on North American vehicle leases alone.
Mitsubishi's loss after tax was $771 million, against a profit of
$87.8 million a year earlier. The company made a currency loss on its operations in Thailand of $311 million.
Both companies recently announced medium-term restructuring plans.
But their forecasts for the current financial year have not impressed analysts.
'I can't believe the restructuring plans of either company,' said Koji Endo, deputy head of research at Schroders Japan Ltd. 'They're just based on hopes.'
Several key points in each carmaker's restructuring plan appeared shaky to analysts.
For instance, Nissan was 'extremely foolish to announce it is planning asset sales,' said analyst Edward Brogan of Salomon Smith Barney Japan Ltd. 'It will get lower prices.'
By his estimate, Nissan will have to sell more than 60 percent of the real estate and shares in its portfolio in order to raise the $4.1 billion it is seeking over the next three years.
Peter Boardman, Tokyo-based auto analyst at SBC Warburg Ltd., said he is concerned by Mitsubishi's optimism about the Japanese market.
Mitsubishi predicts that its Japanese business will swing from an operating loss of $116.6 million in the year just ended to a profit of $113.6 million in the current year. The company expects its unit sales in Japan to grow 7.3 percent to 650,000 vehicles over the period.
But most analysts do not believe the overall Japanese market will support a gain that big.
For one thing, Japan's unemployment rate in April jumped to a record 4.1 percent. 'The domestic economy is going to be much, much weaker than they're hoping,' warned Brogan.
Nissan predicted the operating loss of its North American operations would shrink to $37.9 million this year, from $517 million in the year just ended. Excessive inventories would be eliminated by September.
Most analysts question that assumption, since Nissan is trying to stop subsidizing lease deals at the same time as it is trying to reduce the car stocks that dealers have built up.
The figures for the last fiscal year show just how deep a hole the two companies have dug for themselves.
Nissan's operating income fell by $1.2 billion:
$643.5 million due to lower sales in Japan and North America
$378.5 million due to higher development costs
$189.3 million for higher marketing costs in Japan.
Cost-cutting and currency exchange-rate gains saved Nissan
$1 billion, but it was not enough to keep the company in profit.
Mitsubishi said it lost money on its Japanese and European operations in addition to the severe loss in Thailand caused by that country's currency devaluation.
Despite record sales of $28.3 billion, up 1.7 percent, Mitsubishi announced a group pretax loss of $689.7 million, compared with a pretax profit of $105.7 million a year earlier.
Mitsubishi posted an operating profit in North America, however, of $127.9 million.
'It doesn't look like the leases in the USA are too much of a problem anymore,' said Boardman at SBC Warburg. 'They seem to have put the money away for that. They've cleaned up. Now it's a matter of selling cars.'