Mitsubishi slumps to quarterly loss, multiplying alliance woes

Mitsubishi Motors Corp., already mired in losses before the COVID-19 pandemic hit, sank into the red in the latest quarter as sales and production plunged.

The Japanese automaker swung to a net loss of 14 billion yen ($129.9 million) in the fiscal fourth quarter ended March 31, the company said Tuesday. 

The reversal marked a third-straight quarter of net losses and compared with net income of 63.7 billion yen ($590.9 million) a year earlier.

Operating profit plunged 66 percent to 9.2 billion yen ($85.3 million) in the three-month period.

Revenue shrank 17 percent to 603.4 billion yen ($5.6 billion), as worldwide retail sales retreated 28 percent to 251,000 units, amid tumbling sales in Japan, Europe and Southeast Asia. 

Like rivals across the industry, Mitsubishi is reeling from the impact of the COVID-19 pandemic, which has undercut worldwide demand, disrupted supply chains and forced factory shutdowns. Mitsubishi warned last month that the company would slump to a net loss in the fiscal year ended March 31 and an 89 percent tumble in full fiscal year operating profit.

Overseas, Mitsubishi’s assembly plants in Indonesia and the Philippines are still suspended. Plants in Japan, meanwhile, won’t be back in operation until the end of May.

Citing market uncertainty, Mitsubishi refrained from issuing an earnings forecast for the current fiscal year ending March 31, 2021. Even before the pandemic, falling demand in key markets such as Japan, China and Southeast Asia – the company’s biggest – were denting quarterly returns.

North American retail sales fell 18 percent to 45,000 units in the fiscal fourth quarter, as the regional business fell to a 4.0 billion yen ($37.1 million) operating loss in the latest three-month period, from a regional operating profit of 4.5 billion yen ($41.7 million) the year before.

Retail sales in Europe fell 22 percent to 53,000 units in the quarter, while the European operating loss remained unchanged at 3.8 billion yen ($35.2 million).

Mitsubishi’s plunge exacerbates an earnings crisis confronting its alliance partners, Renault SA and Nissan Motor Co. Mitsubishi’s automotive allies are under similar pressure from volatile sales and slumping profits, as the three-way tie up struggles to find its feet following the arrest of former alliance chairman Carlos Ghosn and the tumult it unleashed.

The companies said they would give an update on their joint mid-term plan May 27. The leaders of the three companies said in January that they would outline a new strategy for splitting work and said that the carmakers would hammer out new mid-term business plans by May.

CEO Takao Kato said Mitsubishi would unveil details of its own mid-term plan at the end of the April-June quarter. Those earnings results are typically announced in early August. 

Kato gave a preview of the plan, saying Mitsubishi aimed to cut global fixed costs by 20 percent – to the tune of 100 billion yen ($927.6 million) – through the fiscal year ending March 31, 2022. 

For the full fiscal year ended March 31, Mitsubishi slumped to a net loss of 25.8 billion yen ($239.3 million) and reported an 89 percent tumble in operating profit to 12.8 billion yen ($118.7 million). Revenue declined 10 percent to 2.27 trillion yen ($21.06 billion), as global retail sales fell 9 percent to 1.13 million vehicles.

Mitsubishi partly cited falling wholesale deliveries and deteriorating model mix for the profit implosion. Higher R&D expenses, outlays for quality issues and labor costs, as well as a hit from unfavorable exchange rates, also took a bite out of Mitsubishi’s full-year earnings.

Naoto Okamura contributed to this report.