Mitsubishi posts profit rise in North America while Europe, Japan struggle
TOKYO -- Mitsubishi Motors' quarterly profit fell in Europe, hit by the weak ruble, while the automaker's North America recovery gathered pace on the back of expanding sales.
Worldwide net income in the fiscal third quarter ended Dec. 31 declined 10 percent to 37.7 billion yen ($314.4 million) on revenues that fell 6 percent to 553.5 billion yen ($4.62 billion), the Japanese automaker said today in its quarterly report.
Total operating profit slid 16 percent to 38.1 billion yen ($317.7 million) in the quarter, from a year earlier.
In North America, the carmaker’s smallest market, quarterly profit tripled to 3 billion yen ($25 million). Sales rose 12 percent to 28,000 vehicles.
Falling sales in Japan and tumbling profits in Europe, where the weakening Russia ruble undercut earnings, sapped quarterly results, despite rising global demand for Mitsubishi’s products. Total global volume increased by 3 percent to 285,000 vehicles.
Higher N.A. forecast
Facing brisk North America demand for the its Outlander Sport compact crossover and Mirage subcompact hatchback, Mitsubishi raised its regional sales forecast by 1,000 units to 117,00 for the current fiscal year ending March 31. That represents a 21 percent increase over 97,000 units sold the previous year.
Mitsubishi forecasts its money-losing North American operations are on pace to notch a 3 billion yen ($25 million) operating profit in the current fiscal year ending March 31.
Mitsubishi hasn't booked operating income in North America since the fiscal year ended March 31, 2007, when it logged a tiny profit of 600 million yen ($5 million).
North America has been a drain on Mitsubishi, partly because of its high-cost, low-output assembly plant in Normal, Illinois, its only factory in North America. But stepped-up local production and favorable exchange rates are rapidly erasing the red ink.
Executives also attributed the turnaround to rising sales, the impact of the yen’s decline against the dollar and cost cutting.
Europe profits down
In Europe, operating profits tumbled 53 percent to 9.6 billion yen ($80 million) in the quarter from 20.6 billion yen ($171.8 million) a year earlier. Sales there rose 16 percent to 67,000 vehicles in the quarter.
But the weakening ruble lopped 2.2 billion yen ($18.3 million) off operating profits from April to December. Earnings were further dented by a worsening sales mix.
Asia outside Japan delivered Mitsubishi’s biggest earnings in the quarter, even as operating profit there fell 10 percent to 14.5 billion yen ($12.1 million) on slow sales in Southeast Asia. In Japan, Mitsubishi’s business swung to a meager regional operating profit of 800 million yen ($6.7 million), from an operating loss of 800 million a year before.