Restructuring plans on track

Mazda, Mitsubishi report strong cost-cutting gains

At the half
Results for six months ended Sept. 30, 2001. Dollars in millions
  FIRST HALF % CHANGE YEAR EARLIER
MITSUBISHI
Revenue $12,835.80 -0.6% $12,918.80
Operating profit (loss) (109.4) - (194.5)
Net income (loss) (263.8) - (633.4)
Unit sales 658,000 -2.50% 675,000
MAZDA
Revenue 8,695.10 3.20% 8,426.30
Operating income (loss) 93.1 - (39.4)
Net income (loss) 11 - (80.4)
Unit sales 493,000 -0.20% 494,000
Notes: Results are consolidated, meaning they include most subsidiaries. Yen results are converted at an exchange rate of $1=119.40, the rate prevailing on Sept. 28.
Source: Company data

TOKYO - First-half results for Mitsubishi Motors Corp. and Mazda Motor Corp. released last week show that the restructuring plans of both companies are on schedule, but the two companies offer far different views on the outlook for the key U.S. market.

Mitsubishi COO Rolf Eckrodt says he does not expect a dramatic retraction in the overall U.S. market in 2002, assuming no further disruptions from the war against terrorism.

Mazda President Mark Fields, on the other hand, expects a major sales downturn ahead because of the pull-ahead impact of 0 percent incentives.

"The question is, how big will it be?" he said last week.

Fields says he sees the U.S. light-vehicle market sliding to 15.2 million units next year from 16.7 million this year. Mitsubishi did not offer a specific retail forecast.

The remarks came as the two carmakers released consolidated, or worldwide, earnings for the first half ended Sept. 30. Mazda pulled into the black in the period, while Mitsubishi narrowed its losses.

Both saw strong improvement on cost cuts that were ahead of target, including headcount reductions and materials costs. A weak yen, which allows a Japanese carmaker to book more yen revenues and profits for every dollar received from an overseas sale, also helped.

Both carmakers also reduced their production capacity in Japan during the half year, but those benefits will not show up until later.

Mazda says it was profitable in Japan, North America and "rest of world," while losing money in Europe. Mitsubishi was profitable only in North America, but trimmed its losses in Japan, Europe, Asia and "other."

Mazda posted a net profit of 1.31 billion, or $11 million at current exchange rates, in the period compared with a loss of $80.4 million a year earlier. It posted an operating profit of $93.1 million against a year-earlier loss of $39.4 million, as revenue rose 3.2 percent to $8.7 billion.

The company predicted a full-year net profit of $10.9 million, up from a forecast of breakeven made in May, and left its forecast of operating profit unchanged at $142.4 million.

Mitsubishi's first-half net loss narrowed to $263.8 million from $633.4 million a year earlier, while its operating loss narrowed to $109.4 million from $194.5 million. Revenue eased 0.6 percent to $12.84 billion. Consolidating the results of the NedCar subsidiary in the Netherlands boosted revenue by almost $837.5 million.

Mitsubishi left its full-year forecast for net income unchanged at breakeven, but raised its outlook for operating profit to $293.1 million from an earlier forecast of $167.5 million. The company had a year-earlier operating loss of $618.6 million.

You can reach James B. Treece at jtreece@crain.com

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