TOKYO - Worsening finances are prompting Mitsubishi Motors Corp. to plan cuts in its model lineup outside Japan.
The company also will reassess its production operations in Japan and overseas, according to a new midterm management plan effective through March 2004. Mitsubishi is compiling that plan.
President Katsuhiko Kawasoe said Mitsubishi's product lineup in the United States and Europe will likely be cut by 40 percent over the next two to three years, in line with a similar cut in Mitsubishi's Japanese lineup. He did not say which models might be dropped.
However, he denied that the production reassessment is aimed at closing Mitsubishi's factory in Australia, although he conceded that the plant is underused.
He said Mitsubishi targets break-even volumes of 160,000 for its U.S. manufacturing unit and 200,000 for its U.S. sales arm.
BEST FULL YEAR
Through late November, Mitsubishi had built 144,143 cars at its Illinois plant. Through November, the company sold 233,959 vehicles in the United States, surpassing its best full year.
In Japan, Kawasoe said he plans to lower the passenger-car production break-even level by 16 percent, from 1,020,000 as of March 1999, to 860,000 by April 2002. He also plans to trim the truck and bus production break-even point by 15 percent from 150,000 in March 1999 to 125,000 by April 2002.
Kawasoe's comments came as he announced that Mitsubishi posted a group net loss of 38.5 billion yen, or $360.3 million at current exchange rates, in the six months ending Sept. 30. Revenues were $14.6 billion.
Mitsubishi did not release group results for the year-earlier fiscal first half; in the full year to March 31, the carmaker had a group net profit of $53 million.
Kawasoe blamed the loss on a dismal truck market in Japan and currency losses. Other problems such as high interest expenses, despite Japan's record-low interest rates, and restructuring costs also hurt.
The company's group pretax loss of $316.4 million was almost equal to its interest payments in the six-month term of $314.7 million.
In addition, the troubled carmaker had extraordinary losses of $52.2 million for restructuring expenses, and $29.1 million for losses on its sale of land and other fixed assets.
Although a stronger yen during the period hurt earnings at other Japanese carmakers, Mitsubishi managed to offset currency losses and the negative impact of lower sales at the parent-company level through cost cutting and reduced sales and marketing expenses.
For the full fiscal year to March 31, 2000, Mitsubishi now is predicting a net loss of $159 million. At the operating profit level, it expects Japan and North America to be in the black, while Europe and other markets, notably Australia, will be in the red.
Kawasoe also announced the formation of an Office of Marketing Strategy for car operations, to be made up of a new Marketing Planning Department and a new Brand Management Department, plus the existing Product Planning Department and Product Development Project, both now within the Car Research & Development Center.
Separately, Suzuki Motor Co. said its group net income rose 8.4 percent to $142.4 million, as revenues rose 8.6 percent to $7.535 billion.
Currency losses because of the stronger yen completely negated higher volumes from the surge in minivehicle sales in Japan and lower costs. Indeed, pretax group profits fell 10 percent but lower corporate taxes pushed the bottom-line figure up from the year-earlier level.