Mitsubishi Motors Predicts a Jump in Earnings

11 years, 6 months ago - 29 April 2013, Wall Street Journal

Mitsubishi Motors Corp. reported solid earnings and issued an upbeat outlook for the current fiscal year—signaling that Japan’s critical auto industry could be steadily gaining ground after years of lackluster performance.

The country’s sixth-biggest car maker posted net of ¥20.7 billion ($208 million) for its fiscal fourth quarter, more than double the ¥10.3 billion posted for a year earlier.

The company forecast net profit of ¥50 billion for the current fiscal year, which started this month, up 32% from the record ¥37.98 billion recorded for the year recently ended.

Mitsubishi’s results were the first to be reported by Japan’s big car makers and set an upbeat tone for the industry. Recent declines for the Japanese currency likely will emerge as a big boost for profits.

“We need to see if [the weaker yen] is just a temporary trend or will continue,” Mitsubishi President Osamu Masuko said at a news conference Thursday. “But the profitability of vehicles built in Japan is improving significantly, and [the vehicles] are regaining a competitive edge.”

Mitsubishi forecast that sales would rise 25% to ¥2.27 trillion in the current fiscal year. Sales rose just 0.4% in the past year.

Analysts expect Honda Motor Co. and Mazda Motor Corp. to report similar strength when they release earnings Friday. Toyota Motor Corp. and Nissan Motor Co. are slated to report earnings in May.

Booming markets have supported solid sales growth, and any further yen weakness this year would act as a tailwind for most Japanese car makers. The yen’s steep declines since late last year have improved the price competitiveness of Japan-made vehicles in markets abroad and boosted results when overseas earnings were repatriated.