Mitsubishi Motors, Mazda project annual losses

[February 04, 2009]  TOKYO (AP) -- Mitsubishi Motors and Mazda -- Japan's No. 4 and No. 5 automakers -- both reported quarterly losses Wednesday and joined a growing list of Japanese automakers expecting to fall into the red for full fiscal year.

Like their rivals, the two automakers are reeling from an unprecedented slowdown in global demand and a sudden appreciation in the yen that has eroded export earnings. No one has been immune, with the entire sector scrambling to cut costs and output.

Mitsubishi forecast a group net loss of 60 billion yen ($670 million) in the fiscal year through March -- its first annual loss in three years. The company had earlier projected net profit of 20 billion yen.

An hour later, Mazda lowered its forecast to a 13 billion yen ($144.4 million) net loss, down from its previous forecast of a 50 billion yen profit. It slashed its sales target 15 percent to 2.55 trillion yen from 3 trillion yen.

The revisions follow Toyota Motor Corp.'s announcement in December that it expects its first operating loss in 70 years this fiscal year, and media reports and analysts predict Nissan Motor Co. will also book a loss for the period.

Mitsubishi Motors Corp. President Osamu Masuko was somber as he described his company's health.

"I mentioned last summer that the financial turmoil posed a major risk for us," he told reporters. "But the situation we find ourselves in right now is far worse than I ever expected."

The Tokyo-based company posted a 17.6 billion yen loss for the fiscal third quarter, compared with a net profit of 27.3 billion yen a year earlier. Revenue dropped 30 percent on-year to 444.1 billion yen, while an last year's operating profit turned into an operating loss of 5.5 billion yen.

The company, which makes the Eclipse sports coupe and Galant sedan, will enact a series of emergency measures to reduce costs and adjust inventories, Masuko said.

On top of steep production cuts, Mitsubishi Motors will cut executive pay by up to 40 percent starting March, scale back participation in motor shows and withdraw from the Dakar Rally and other off-road races.

It is also canceling or postponing major capital expenditures. The company said it will push back opening a new SUV plant in Russia and has scrapped plans to upgrade its engine production capacity.

Mazda Motor Corp.'s third quarter wasn't quite as bad, though the maker of the X-8 sports car and Miata roadster said it expects business to keep deteriorating in the January-March period.

The Hiroshima-based company booked a small loss of 600 million yen, down from a 15.9 billion net profit a year ago. Revenues tumbled 40 percent to 512.4 billion yen.

In a breakdown of its quarterly operating profit, which reflects core business performance but excludes taxes, dividends, asset sales and other items, the company said the strengthening yen chopped off 42 billion yen, while declining sales cut 34.1 billion yen.

That helped weigh Mazda down to an operating loss of 24.2 billion yen for the quarter, versus a 35.3 billion profit a year earlier.

Like other carmakers, Mazda and Mitsubishi have seen their sales in the U.S. plunge in recent months. Mazda said Tuesday its sales in the country fell 27.3 percent in January from a year earlier, while those at Mitsubishi declined 34.5 percent.

Mazda has close ties with U.S. carmaker Ford, which helped turn around its business decades ago, sending executives and sharing technology and auto parts to cut costs. Struggling under massive losses, Ford in November said it would sell the majority of its 33.4 percent stake in the Japanese carmaker, although the two would continue to work closely together.

Toyota is due to report third quarter earnings Friday, and Nissan is scheduled to release results Monday.

In trading Wednesday, shares of Mitsubishi Motors rose 2.6 percent to 117 yen and Mazda gained 4.4 percent to 142 yen.

[Associated Press; By TOMOKO A. HOSAKA]

Associated Press writers Jay Alabaster and Shino Yuasa contributed to this report.

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