Mitsubishi braces for N.A. losses amid product shift
TOKYO -- North America remains a weak link for Mitsubishi Motors Corp., with the company expecting to swing to an operating loss in that region as it ramps up local output of its Outlander Sport small crossover and phases out several North America-only products.
Mitsubishi expects an operating loss of ¥260 million, or about $3.3 million, in North America in the fiscal year ending March 31, 2013. That backtracks from an operating profit of $15.7 million in the prior fiscal year.
The problem is discontinuation of the Galant sedan, Eclipse and Eclipse Spyder sporty cars and the Endeavor SUV, all of which were made at the company's Illinois assembly plant.
Sales of those nameplates have dropped this year as Mitsubishi sells down remaining stock.
Meanwhile, the company is getting hit by foreign exchange losses on the models it imports from Japan: the Lancer sedan, Outlander SUV and Outlander Sport.
Mitsubishi aims to fight back by building the Outlander Sport at its Illinois plant to meet local demand and for export to Russia, Latin America and the Middle East.
Last month, Mitsubishi said that Outlander Sport production had started there at an annual capacity of 50,000 units.
Mitsubishi predicted a narrower operating loss for North America than it did in an outlook issued April 26. Three months ago, it predicted its regional operating loss would come in at $3.5 million. The improvement came from a better foreign currency outlook and expectations for lower material costs and cost savings in product development.
The carmaker says North American sales will be flat this fiscal year at 93,000 units.
Mitsubishi gave the forecast when it released results for the three months through June 30. Net income in the quarter almost quintupled to $254.4 million, from $54.4 million in the year-earlier period.
Operating profit rose 22 percent to $190.4 million, while revenue fell 3 percent to $5.34 billion.
Mitsubishi also raised its forecast for April-September net income to $254.9 million from a forecast issued in April of $114.7 million. But for the current fiscal year, it now says net income will come to $165.7 million, vs. the previous forecast of $318.7 million.
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