Cost cuts boost Mitsubishi profits

Japanese car giant Mitsubishi said today that its second-quarter net profit improved 60% to 10.1 billion yen on cost cuts, but lowered its projection for China, where a bitter territorial dispute is sending sales plunging.

The company, which reported a 6.3 billion yen profit for the July-September period last year, is among the Japanese car firms making a solid recovery after last year’s earthquake and tsunami disaster that disrupted supply chains. The floods in Thailand that followed added to production woes.

Mitsubishi’s quarterly sales dipped 7% to 440.7 billion yen as a strong yen and economic woes in Europe added to the damage, the Tokyo-based manufacturer said today.

Mitsubishi stuck to its profit forecast for the full fiscal year at 13 billion yen, down 46% from the previous year. It lowered its sales projection to 1.83 trillion yenfrom an earlier 1.98 trillion yen, which will mark a 1% rise on the year.

The maker of the i-MiEV electric car and Outlander sports-utility vehicle now expects to sell 42,000 vehicles in China, lower than the initial forecast for 73,000 vehicles, and falling short of the 63,000 vehicles sold the previous financial year.

Violent protests and a call to boycott Japanese goods have erupted in some parts of China after Japan nationalised a group of tiny uninhabited islands south-west of Japan, controlled by Tokyo but also claimed by Beijing. Japanese shops, vehicle dealerships and people driving Japanese cars have been attacked.

Mitsubishi also lowered its global sales forecast by 46,000 units to 1.04 million vehicles, although the latest forecast still marks a 4% improvement from the previous financial year. Mitsubishi lowered its projections across all major regions, including Japan, North America and Europe, as well as China.

Mitsubishi said it was upbeat about boosting production in emerging markets, which hold growth potential, and will reduce costs by increasing local parts purchases to avert being hurt by an unfavourable exchange rate.

All Japanese car makers have been hard hit by anti-Japanese sentiments in China, and recent sales have fallen to about half of what they were before the territorial dispute surfaced.

Among other Japanese makers, Honda’s quarterly profit surged 36% to 82.2 billion yen, bouncing back from the tsunami disaster.

But the maker of the Accord sedan and Asimo robot was forced to lower its annual forecasts over the China problem yesterday. Honda expects to sell 4.1 million vehicles in the year to March 2013, down from an earlier 4.3 million vehicles – but still an improvement over the 3.1 million vehicles for the previous disaster-hit financial year.

Toyota, Japan’s biggest car maker, and Nissan, allied with Renault SA of France, report earnings next week. Mazda reports its results tomorrow.

Mitsubishi shares, which have lost about a third of their value over the last year, closed up 1.5% in Tokyo trading shortly after earnings were announced.