Exports Help Lift Mitsubishi Motors

Strong exports, particularly to Europe, helped Mitsubishi Motors, one of Japans leading vehicle makers, increase sales and net profits in the first half. However, the group warned of a sharp fall in already sluggish domestic sales and revised down its forecast for full-year pre-tax profits. Net profits rose 9 per cent from Y7.9 billion to Y8.6 billion ($70 million) and parent company sales advanced 12 per cent from Y1,177.2 billion to Y1,319.5 billion. Recurring profits, however, fell 6 per cent from Y18.7bn to Y17.5bn, partly as a result of increased expenditure on marketing. MMC had already warned it would report a consolidated net loss of Y40 billion in the full year because of foreign exchange losses relating to its Thai manufacturing operations. On Friday, it said it expected full-year unit vehicle sales in Japan to be 20 per cent lower than previously forecast. The company, which has seen sluggish demand for many of its products, blamed the anticipated lower sales on the sharp downturn in demand following the increase in the consumption tax in April. However, it admitted that the arrest of a senior executive for his part in illegal payments to a corporate racketeer group would hit sales. MMC has decided to cut marketing activities following the arrest and the revelation that the company had made the illegal payments since 1989. Domestic sales are expected to be 685,000 units, compared with the 860,000 previously forecast. In value terms, full-year sales at the parent company level are expected to be higher at Y2,600 billion, against Y2,585.9 billion. Pre-tax profits excluding exceptionals are forecast to fall nearly 40 per cent from Y58 billion to Y35 billion. Net profits will climb from Y15.1 billion to Y18 billion. The forecasts are significantly lower than those made in May. MMC suffered in the domestic market from a lack of popular models, particularly in recreational vehicles, which have been the fastest growing in Japan in recent years.