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Mitsubishi Motors announces 1H 2008 First Half Financial Results and Forecasts for the Full Year

Tokyo, October 30,2008 — Mitsubishi Motors Corporation today announced its sales and financial results for the first half of the 2008 fiscal year ending March 31, 2009, and outlined its forecast for the full year.

  1. 1H 2008 results
  2. (1) Performance overview
    Mitsubishi Motors posted consolidated net sales of 1,214 billion yen for the first half of fiscal year 2008 (April 1 through September 30, 2008), an eight percent decrease of 99.4 billion yen over the same period last year (1,313.4 billion yen). The drop in net sales, resulting from lower unit sales and the impact of the stronger yen, was partly countered by increased revenues stemming from a more profitable model mix as well as other factors.

    Mitsubishi Motors posted operating income of 25.4 billion yen, a 35 percent increase of 6.6 billion yen over the same period last year despite sharp increases in the cost of raw materials and the impact of the stronger yen. Factors contributing to the improvement include a more profitable model mix as well as reductions in selling and marketing as well as other costs. The company posted ordinary income of 20.9 billion yen, a year-on-year increase of 14.3 billion yen. This was due to a higher operating income, favorable changes in the balance of interest paid and received and improved gains in foreign exchange transactions.

    Mitsubishi Motors posted a net profit of 12.8 billion yen, a year-on-year improvement of 18.4 billion yen and the first profit for the first half since FY2002. This improvement was due to an increase in ordinary income and to the elimination of such extraordinary losses as reorganization costs incurred in the integration of domestic consolidated sales companies, which were booked in the previous fiscal year.

    (2) Unit sales
    Mitsubishi Motors' global retail unit sales for the first half of fiscal 2008 totaled 602,000 vehicles, a 13 percent decrease of 89,000 units compared to 691,000 for the same period last year.

    In Japan, where overall demand remained at virtually the same level as last year, Mitsubishi Motors posted unit sales of 83,000 vehicles, a 17 percent decline of 18,000 units year on year. This was primarily due to the fact that, amid intensifying competition, the company did not bring its new models to market until September.

    In North America Mitsubishi Motors posted unit sales of 71,000 vehicles, a 22 percent decrease of 21,000 units over the same period last year. While unit sales increased in Canada and Mexico, the fall in total unit sales is attributed to a deterioration in consumer confidence and to the credit crunch brought about by financial instability in the United States.

    In Europe Mitsubishi Motors potsed unit sales of 168,000 vehicles. This slight increase over the previous year was due mainly to higher sales in Russia and Ukraine which offset lower sales in the countries of Western Europe.

    In its Asia & Other regions, Mitsubishi Motors posted unit sales of 280,000 vehicles, a 15 percent decrease of 51,000 units compared to the previous year. Despite firm sales in Indonesia, the Philippines and Brazil, sales fell due to the ending of the supply of parts for local vehicle assembly to Proton Holdings Berhad in Malaysia and to the impact of slower sales in other markets.

  3. 2008 full-year forecast
  4. In the light of its first half results and of the current sales climate, Mitsubishi Motors has revised the full-year forecasts announced on April 25 2008.

    Mitsubishi Motors has revised its full-year global unit sales (retail) forecast in anticipation of significantly slower sales in all markets due to the impact of the world-wide financial turmoil and slowdown in the global economy. The company has lowered its full-year unit sales forecast to 1,228,000 vehicles, a six percent reduction of 81,000 units compared to the previous forecast.

    Mitsubishi Motors has lowered its net sales forecast to 2,360 billion yen, an 11 percent decrease of 290 billion yen on the previous forecast. This is in line with the company's revision of its unit sales forecast and a review of exchange rates expected for the second half. The company has revised its operating income forecast to 50 billion yen, a 17 percent decrease of 10 billion yen, factoring in comprehensive cost reductions to counter the impact of reduced unit sales. The company has revised its ordinary income forecast to 43 billion yen, a 10 percent decrease of 5 billion yen, factoring in an improvement in the balance of interest paid and received. The company leaves its original full-year net income forecast of 20 billion yen unchanged due to favorable changes in extraordinary income and loss items and in corporate taxes in the first half of fiscal 2008.

  5. Strategic mid-term tactics (by region)
  6. The global financial crisis is impacting the automobile industry as seen in a weakening of consumer confidence and in the effects of the credit crunch. It is clear that there will be a significant drop in overall demand in the mature economies of Europe and North America and also that there will be a slowdown in the economies of many of the emerging nations that have until recently been relatively buoyant.

    Mitsubishi Motors will focus all its efforts on reviewing its work processes and renew its efforts to reduce costs. At the same time the company will, from a mid- to long-term perspective, accelerate promotion of its "building on our strengths" and "revise work processes" policies.

    Starting in the second-half of fiscal 2008, Mitsubishi Motors will introduce the Lancer series and the new Pajero Sport model into many world markets and, at the same time, will implement the regional mid-term initiatives outlined below.
    (1) Initiatives in mature markets
    • Japan
    Strengthen after-sales services business and maximize efficiencies in sales network.
    • USA
    Meet shift in demand to smaller cars; streamlining and cost reduction at Illinois plant.
    • Europe
    Add more low-CO2 emission models to the lineup; raise capacity utilization at European production hub.
    (2) Initiatives in emerging markets
    • Russia, Ukraine
    Introduce new Pajero Sport; expand sales network
    • China
    Establish new sales company to boost built-up imports business
    • Middle East
    Introduce new Pajero Sport; establish new controlling company to strengthen support structure for sales, parts and after-sales service operations
    • Brazil
    Introduce new Pajero Sport; expand range of "green" flexible fuel vehicles (FFV)
    (3) Entry into new markets and other initiatives
    • Korea
    Start vehicle sales through sole distributor MMSK Corporation.
    • Thailand
    Start production of new Pajero Sport SUV
    • India
    Strengthen presence in SUV segment with introduction of locally-produced Outlander model.

Note on forward-looking statements
All statements herein, other than historical facts, contain forward-looking statements and are based on MMC's 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;
    - Changes in laws, regulations and government policies; and
    - 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.
If you are interested in investing in Mitsubishi Motors, you are requested to make a final investment decision at your own risk, taking the foregoing into consideration. Please note that neither Mitsubishi Motors nor any third party providing information shall be responsible for any damage you may suffer due to investment in Mitsubishi Motors based on the information shown in this presentation.

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