News - Mitsubishi
More bloodletting at Mitsubishi
Mitsubishi announces new executive team and measures to restore profit
2 Feb 2005
MITSUBISHI Motors Corporation will sell fewer vehicles and lose even more money than it expected this financial year, according to a new revitalisation plan announced last Friday.
The Mitsubishi Motors Revitalisation Plan supersedes the Business Revitalisation Plan revealed on May 21, 2004, and returns a 34 per cent controlling share in MMC to the three major companies within the Mitsubishi group.
It also forecasts a fiscal 2004 sales volume of 1,337,000 vehicles – a decrease of 63,000 vehicles on the sales estimate it released with its half-year results in November, and 190,000 down on the previous year.
As a result, the new plan forecasts a net loss of 472 billion yen – significantly more than the ¥240 billion loss forecast in November – largely due to falling sales in the US and Australia.
In a frank, 2200-word statement issued on January 28, MMC said: “Although it will be difficult for the company to return to profitability before the end of fiscal 2005, it will do so in fiscal 2006, and in fiscal 2007 will achieve a record net income for the term of ¥41 billion.”
To achieve this, the new revitalisation plan includes wide-ranging measures, including a new executive line-up, to restore profitability and both customer and public trust in the brand by March 2008, the end of fiscal year 2007.
Chiefly, it involves borrowing a further ¥270 billion – the second large-scale loan to be announced by MMC in eight months – and raising a similar amount through the issue of shares.
MMC says the resulting ¥490 billion of extra funding (excluding a ¥50 billion debt-for-equity swap) will be allocated for maximum effect in R&D and capital investment.
Mitsubishi Motors Australia director of business and corporate strategy Paul Stevenson told GoAuto the new business plan would have little impact on MMAL.
“The big part of this is that the other Mitsubishi group companies are back in the driving seat,” he said.
“They’ve got their 34 per cent share and a controlling interest of the company again.
“Within that, MMC becomes a full affiliate of Mitsubishi Heavy Industries to send a clear message globally, and especially to financial markets, that there’s no way known they’re going to let MMC go under.
“It’s now got the full backing of the big companies in the Mitsubishi group and from our perspective the hope is that all the negative speculation about MMC’s future will start going away.”
Mr Stevenson said Mitsubishi’s Australian operations would be unaffected by the latest announcement, which aimed to “get all of the bad news out for this financial year to start next financial year with a clean slate”.
He said MMAL’s financials would be “pretty ugly” this fiscal year before returning to profit in fiscal year 2005.
“MMC’s requirement is for us to get back to break-even and try to reverse the negative results of this year,” Mr Stevenson said.
“To be honest, since 2001 we’ve been dreading the last two years of Magna sales because it’s been out there so long. On top of that came the DC (DaimlerChrysler) pullout and Lonsdale plant closure. Last year was just damage control.”
Mr Stevenson said the abandonment of MMAL’s long-wheelbase US Diamante export program had impacted on the company’s financial position, but it had been wrongly reported that it received a $200 million bailout to cover those costs.
“The whole PS (Magna replacement) project involved two models. A large investment was made for the second model in terms of capacity and R&D, and we had hoped to amortise that investment over the model’s life,” he said.
“What MMC and Mitsubishi US have done is to depreciate it in one lump sum via an accounting standard that allows you to write things off this way.”
He said expressions of interest for the purchase of the Lonsdale engine plant, which closed last year due to a global over-capacity problem, closed on Monday.
“At last count there were 26 many and varied expressions of interest – companies from all over the world, some wanting the land, others bits and pieces and some wanting full control of the foundry,” he said.
“We will work with the government in evaluating each of them – some of which are yet to inspect the facility -– and it will be a joint decision, but at the end of the day it’s our property and we want to maximise our return.”
Changes at the topMITSUBISHI’S revitalisation plan released last week included a new executive line-up, headed by Mitsubishi Heavy Industries chairman Takashi Nishioka.
PICTURED: Takashi Nishioka (left) and Osamu Masuko. Mr Nishioka becomes chairman and CEO of Mitsubishi Motors Corp, while MMC’s managing director in charge of overseas operations Osamu Masuko – with whom Mitsubishi Australia boss Tom Phillips has forged an important new relationship in recent months – becomes president and chief operating officer.
Mr Masuko maintains responsibility for overseas operations.
Other members of the executive include: Hiizu Ichikawa, managing director - CFO Akira Kijima managing director - head of product operations and Fujio Cho, managing director - head of domestic operations. Non-executive board members include Rudiger Grube, Mikio Sasaki and Yasushi Ando.
MMC’s top three executives have resigned: chairman and CEO, Yoichiro Okazaki (a former director at Mitsubishi Heavy, who was appointed MMC chairman last April) president and COO Hideyasu Tagaya and vice-chairman Koji Furukawa.
Revitalisation planKEY aspects of Mitsubishi Motors Corporation’s revitalisation plan announced last week are:
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