Business / Corporate

Mitsubishi Motors forecasts biggest loss in 16 years amid COVID-19 pandemic

Kyodo, AP, JIJI

Mitsubishi Motors Corp. has said it expects a group net loss of ¥360 billion ($3.4 billion) for the current business year through March, its biggest loss in 16 years, due to slowing global sales following the spread of the novel coronavirus.

The carmaker, an alliance partner of Nissan Motor Co. and Renault SA of France, also said during a news conference Monday that it would close its subsidiary's plant producing Pajero and Outlander sport utility vehicles in central Japan in the first half of 2021 as part of restructuring efforts.

The projected net loss for fiscal 2020 would be bigger than the previous year's ¥25.78 billion and also the largest since fiscal 2004, when it recorded red ink of ¥474.79 billion after incurring massive recall costs.

It expects an operating loss of ¥140 billion, against a profit of ¥12.79 billion in fiscal 2019, on sales of ¥1.48 trillion, down 34.8 percent.

For the first quarter, which ended last month, Mitsubishi Motors posted a combined net loss of ¥176.16 billion, compared with a net profit of ¥9.31 billion for the same period a year earlier. Its operating loss stood at ¥53.34 billion, falling from a profit of ¥3.86 billion, on sales of ¥229.55 billion, down 57.2 percent.

The company logged a special loss of ¥120 billion following a write-off of impairment losses on fixed assets.

"We're facing a severe business environment that we've never experienced (due to the pandemic)," CEO Takao Kato said in an online news conference.

Unveiling its business plan through fiscal 2022, the automaker said it would cut fixed costs by 20 percent or more through measures such as soliciting early retirements and reining in new recruitment. It will also focus its business resources on Southeast Asian countries, the company's core market.

The firm said it expected results to recover next fiscal year, once COVID-19 is brought under control. Product development would leverage "synergies” with alliance partners, and labor costs would be reduced through pay cuts, hiring freezes and voluntary retirements, the automaker said.

Tokyo-based Mitsubishi also said it was working on innovative technology, such as improved diesel engines, electric vehicles and autonomous driving. Its electric vehicles are a strength as environmental standards continue to toughen, especially in major markets like China, it said.

Mitsubishi Motors has continued to manufacture the Pajero for overseas markets after ending production for the domestic market last year, but it will halt all output of the SUV after closing its subsidiary's plant in Gifu Prefecture.

Production of the Outlander and other vehicles will be transferred from the plant to its factory in nearby Aichi Prefecture, the company said.

With the closure of the Gifu factory, plants in Okazawa, Aichi and Kurashiki, Okayama Prefecture will be the automaker's only domestic manufacturing bases.

"We're not considering drastic streamlining steps" at the remaining two plants, Kato said.

Pajero Manufacturing was established in December 1943 and currently manufactures the Pajero SUV and two other models. It has been adjusting production levels since April this year.

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