Mitsubishi rebounds to profit on higher sales, cost cutting

TOKYO -- Rebounding profits in North America helped troubled Mitsubishi Motors Corp. jump back into the black in the just-finished fiscal year, as the recovering Japanese automaker rode a tailwind of surging sales, big cost cuts and favorable exchange rates.

Mitsubishi’s global operating profit jumped 19-fold to 98.2 billion yen ($924.5 million) in the fiscal year ended March 31. The company posted net income of $1 billion, reversing a net loss of $1.87 billion in the previous fiscal year.

Revenue climbed 15 percent to $20.6 billion in the 12-month period, while worldwide retail sales grew 19 percent to 1.1 million vehicles.

The robust results underscored the V-shaped recovery CEO Osamu Masuko has pursued in the wake of a 2016 fuel economy scandal and the company’s ensuing tie-up with former rival Nissan.

“We were able to make a good start, achieving the targets which were even revised upward during the fiscal year,” Masuko said in a news release regarding the performance in the first year of his company’s midterm business plan to restore growth and profitability.

Results improved over the previous year when sales were hammered by fuel economy testing misconduct in Japan. Earnings also weren’t depressed by outlays to cover the costs of recovering defective Takata airbags, which weighed down results the year before.

The absence of those negatives boosted earnings, as did rising sales and fresh savings from joint purchasing with the Renault-Nissan Alliance.

The fuel economy scandal not only undercut Mitsubishi’s sales at home, it opened the door for Nissan Motor Co. to take a controlling 34 percent stake in Mitsubishi in late 2016.

Mitsubishi is now aggressively cutting costs through joint purchasing, logistics and other synergies with its new alliance partners. Earlier this year, for example, Mitsubishi said it would use Renault’s sales financing subsidiary in the Netherlands. It is already using Nissan’s sales financing in such markets as Canada, Australia, New Zealand and Thailand.

The introduction of new products, such as the Eclipse Cross crossover in the U.S. and the Xpander people mover for Southeast Asia, helped drive sales higher.

Global wholesale volume rose 14 percent to 1.26 million vehicles in the fiscal year.

Wholesale deliveries rose 7.7 percent to 182,000 vehicles in North America in the 12-month period but declined 5.3 percent to 213,000 units in Europe.

Profits were undergirded by rebounding business in North America, where the Eclipse Cross was added to the lineup in Mitsubishi’s January-March fiscal fourth quarter.

North America notched a regional operating profit of $9.4 million in the fiscal year, erasing an operating loss of $156.3 million from the year before.

Europe also returned to profit, notching $102.6 million, compared with an operating loss of $203.4 million.

Looking ahead, Mitsubishi expects worldwide operating profit to increase 12 percent in the current fiscal year ending March 31, 2019, while net income inches ahead 2 percent.

Gains will come from rising sales and stepped-up cost control.

Mitsubishi forecasts global retail sales to grow 14 percent to 1.25 million vehicles.

North American sales are predicted to expand 19 percent to 184,000 vehicles. Volume in the region including the key China market should surge 24 percent to 194,000 units. European retail sales are seen increasing 11 percent to 201,000 vehicles.