TOKYO - Mitsubishi Motors Corp. and Nissan Motor Co., the two sick men of the Japanese auto industry, reported last week that huge losses on overseas operations and weak sales at home pushed them deep into the red for the fiscal year ended March 31.
Nissan, citing losses of more than $680 million on North American vehicle leases alone, posted a net loss of $106 million after a profit of $588.5 million a year earlier. It was Nissan's fifth net loss in the last six years.
Mitsubishi, citing a $311 million currency loss on Thailand operations, reported a consolidated net loss of $771 million, vs. a profit of $87.8 million a year earlier.
The losses had been expected. Both companies also have laid out their medium-term restructuring plans in recent weeks.
However, forecasts for the current year given by Nissan and Mitsubishi tipped their hands about their near-term approaches to dealing with their problems. Analysts were not impressed.
'I can't believe the restructuring plans of either company. They're just based on hopes,' said Koji Endo, deputy head of research at Schroders Japan Ltd.
Several key points in each carmaker's restructuring plans appeared shaky.
For instance, Nissan was 'extremely foolish to announce they're planning asset sales. They'll get lower prices' for the stocks and real estate the company plans to unload to trim debt, said analyst Edward Brogan of Salomon Smith Barney Japan Ltd.
By his estimate, Nissan will have to sell more than 60 percent of the real estate and shares in its portfolio in order to reap the $4.1 billion it seeks from those sales over the next three years.
Peter Boardman, Tokyo-based auto analyst at SBC Warburg Ltd., said he is concerned by Mitsubishi's optimism about the Japanese market.
Mitsubishi predicted that its Japan business will swing from an operating loss of $116.6 million in the year just ended to a profit of $113.6 million in the current year, in part because it sees its home-market sales surging 7.3 percent to 650,000 vehicles.
But most analysts do not see the overall Japanese market supporting a sales gain that large. For one thing, Japan's unemployment rate in April jumped to a record 4.1 percent; if calculated by American methods, the jobless rate probably would have topped the U.S. rate of 4.3 percent.
'The domestic economy is going to be much, much weaker than they're hoping,' warned Brogan.
Nissan, meanwhile, said the operating loss at its North American operations will narrow to $37.9 million this year, from $517 million in the year just ended, with excessive inventories brought in line by September.
Most analysts question that assumption, since Nissan is trying to swear off subsidized lease deals even as it wants to move vehicles off dealer lots.
The figures for the last fiscal year show just how deep a hole the two companies have dug for themselves.
Beyond the $683.1 million hit it took on North American leases, Nissan said operating income also was slashed by $643.5 million due to lower sales in Japan and North America; by $378.5 million due to higher development costs; and by $189.3 million for higher marketing costs in Japan.
Cost-cutting and exchange-rate gains kicked in $1 billion, but it was not enough. On a pretax basis, Nissan swung to a loss of $185.1 million in the year ended March 31, from a profit of $739.7 million a year earlier.
Mitsubishi, meanwhile, said it lost money on its Japanese and European operations in addition to the severe hit it took in Thailand due to that country's currency devaluation.
Despite record revenue of $28.3 billion, up 1.7 percent, Mitsubishi posted a group pretax loss of $689.7 million, compared with a pretax profit of $105.7 million a year earlier.
It posted an operating profit in North America, however, of $127.9 million. 'It doesn't look like the leases in the United States are too much of a problem anymore,' said Boardman.
'They seem to have put the money away for that; they've cleaned up. Now it's a matter of selling cars.'