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Mitsubishi Motors Announces FY2006 Full-year Results and FY2007 Forecasts

Tokyo, April 26, 2007 Mitsubishi Motors Corporation (MMC) today announced its full-year results for the year ending March 31, 2007, together with forecasts for the year ending March 31, 2008.

Fiscal 2006 full-year results

1. Fiscal 2006 overview
Mitsubishi Motors' consolidated sales for fiscal 2006 totaled 2 trillion, 202.9 billion yen: an increase of 82.8 billion yen over the previous fiscal year. Favorable yen exchange rates and a more profitable model mix more than offset decreases in retail sales volume and in the OEM supply volume resulting from the ending of the production of the smart forfour.
Mitsubishi Motors posted an operating profit of 40.2 billion yen, an improvement of 33.4 billion yen over the previous fiscal year. This significant improvement in operating profit stems from the aforementioned favorable exchange rate, a more profitable model mix and from improved profitability of financial service operations in the United States and reductions in costs; all of which more than offset the impact of increased sales costs in North America and a rise in raw material costs.
Mitsubishi Motors posted an ordinary profit of 18.5 billion yen, a year-on-year gain of 36.3 billion yen that stemmed partly from an improvement in net interest income. The company reported a net income of 8.7 billion yen, an improvement of 100.9 billion yen. Factors contributing to this improvement in the net position include the non-recurrence of asset impairment accounting charges in Japan and of restructuring charges booked last year, as well as extraordinary earnings stemming from the dissolution of special purpose entities.
Fiscal 2006 marks the first time Mitsubishi Motors has moved into the black at all levels (operating, ordinary and net profits) for the full financial year since fiscal 2002.

2. Sales volume
Global retail sales of vehicles in fiscal 2006 totaled 1,232,000 vehicles, a decrease of 112,000 (8.3%) compared to the 1,344,000 sold in fiscal 2005.
In Japan, MMC sold 247,000 vehicles, a year-on-year decrease of 3.9% or 10,000 units, slightly better than the domestic market (4.3% fall year-on-year), which was impacted by sluggish sales of registered vehicles (i.e., cars other than minicars). The introduction of the new Pajero and Delica D:5 models in the second half of the year contributed to Mitsubishi Motors' better-than-market performance.
In North America, the company sold 164,000 vehicles, a 5.1% increase of 8,000 over last year. This was helped by the first yearly increase in sales recorded in the U.S. market since fiscal 2001 and stemmed principally from the introduction of new models - the Eclipse Spyder in April and the Outlander SUV in November last year - and from the implementation of more sales-boosting initiatives more closely tailored to individual regions.
In Europe, Mitsubishi Motors sold 282,000 vehicles, a 5.6% increase of 15,000 units driven by continuing robust sales in Russia and by a doubling of sales in the Ukraine.
In Asia and other regions, Mitsubishi Motors sold 539,000 vehicles, an 18.8% decline or 125,000 fewer than the previous year. Firm sales in Latin America, the Middle East and Africa were more than offset by lower shipments of parts for use in local production in Taiwan, China and the ASEAN countries.

Forecasts for fiscal 2007

1. Overview
In fiscal 2007 Mitsubishi Motors will aim to boost global sales volume by 7.4% or 91,000 units over fiscal 2006 to 1,323,000 on the back on the extensive introduction of two global strategic models that use the company's next-generation platform: the Outlander and the new Lancer (GALANT FORTIS in Japan). The Outlander was introduced first in Japan in 2005, and has since been phased into other global markets during fiscal 2006. It has been well-received in all markets. The new Lancer, given its global launch in North America this March is to be phased into Europe, Japan and other regions in the near future.
Regional sales forecasts are as follows. Japan: 250,000 vehicles, a 1.2% increase of 3,000 over the previous year; North America: 176,000 vehicles, a 7.3% increase of 12,000; Europe: 316,000 vehicles, a 12.1% increase of 34,000; Asia and other regions: 581,000 vehicles, a 7.8% increase of 42,000.
On the back of the increases in sales volume given above, and of OEM supplies to auto manufacturers in Japan and overseas, Mitsubishi Motors forecasts net sales of 2 trillion, 430 billion yen, a 10.3% increase of 227.1 billion yen over fiscal 2006. Despite forseeing falling profits at the U.S. financial service operations and increased selling expenses, the company predicts a 51 billion yen operating profit, an increase of 26.9% or 10.8 billion yen, due to increased sales from new model introductions and OEM agreements.
Mitsubishi Motors forecasts an ordinary profit of 30 billion yen, a year-on-year increase of 62.2% or 11.5 billion yen, and a full-year net profit of 20 billion yen, a 2.3-fold increase over fiscal 2006.

2. Operational measures by region
(1) Japan
  • Introduce fully redesigned GALANT FORTIS and LANCER EVOLUTION X1 models and additions to the Delica D:5 lineup.
  • Establish Delica D:5, Pajero and Outlander SUV models as long-sellers.
  • Strengthen after-sales operations.
  • Accelerate restructuring of sales networks (integrating and merging 29 consolidated sales companies into five companies covering extended territories, plus consolidating parts dealers.)
   1 Japan-market names for Lancer and Lancer Evolution are GALANT FORTIS and LANCER EVOLUTION X, respectively

(2) North America
  • Strengthen Mitsubishi Motors brand with introduction of Lancer Evolution.
  • Increase sales with the introduction of new Outlander and Lancer models.
  • Focus advertising on best-selling models and main regional markets.
  • Continue implementing dealer support measures to promote vitalization of dealer network.
  • Improve productivity and profitability at the company's U.S. production facility.
(3) Europe
  • Beef up and strengthen sales of SUV lineup (Outlander, Pajero, L200).
  • Expand sales with introduction of new Lancer.
  • Further expand sales in growing markets such as Russia and the Ukraine by bringing marketing under direct control of MMC head office.
  • Start supplies of all-new SUV model to PSA Peugeot Citroen.
(4) Asia and other regions
  • China: Strengthen built-up import car operations through addition of new models and establishment of a new sales company. Work with South East (Fujian) Motor Co., Ltd. to upgrade Mitsubishi brand sales network.
  • Thailand: Maintain and expand pickup model production operations.
  • Latin America, Middle East and Africa: Boost sales further through introduction of new models (Pajero, Lancer and Outlander).
  • Australia: Strengthen sales of models introduced in 2006 (Triton, Pajero and Outlander) and introduce Lancer to strengthen built-up import sales.
3. Mid-term business plan
Fiscal 2007 marks the final year of the Mitsubishi Motors Revitalization Plan introduced in fiscal 2005 and under which the company has been working to reestablish itself. During the current fiscal year Mitsubishi Motors plans to announce a new mid-term business plan based on the company's performance in fiscal 2007, the principal thrust of which will be the creation of an infrastructure that will underpin sustainable future growth.

Note on forward-looking statements

All statements herein, other than historical facts, contain forward-looking statements and are based on our current forecasts, expectations, targets, plans, and evaluations. Any forecasted value is calculated or obtained based on certain assumptions. Forward-looking statements involve inherent risks and uncertainties. A number of significant factors could therefore cause actual results to differ from those contained in any forward-looking statement. Significant risk factors include:
    - feasibility of each target and initiative as laid out in this presentation;
    - fluctuations in interest rates, exchange rates and oil prices, etc;
    - changes in laws, regulations and government policies;
    - regional and/or global socioeconomic changes
Potential risks and uncertainties are not limited to the above and MMC is not under any obligation to update the information in this presentation to reflect any developments or events in the future.

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