Mitsubishi Motors banks on emerging markets to double profit
TOKYO (Reuters) - Mitsubishi Motors Corp said it would count on rapid expansion in emerging markets and big cost cuts to double its operating profit in three years, anticipating a resumption of dividends in the year to March 2014.
Announcing a new three-year business plan on Thursday, Mitsubishi Motors, one of Japan's smallest automakers, said it would target a 37 percent jump in sales of Mitsubishi-brand vehicles to 1.37 million vehicles by 2013/14.
The figure is lower than the 1.5 million vehicles flagged by President Osamu Masuko in an interview last June.
Mitsubishi Motors has struggled to crawl back from a sharp global sales slide, most notably in the United States, where its factory in Normal, Illinois, is severely underused.
Worries particularly remain over the 440 billion yen ($5.36 billion) of unredeemed preferred shares mostly issued to the Mitsubishi group, conversion of which would result in a massive dilution in the value of its common stock, adding more than 3.5 billion shares to the current 5.5 billion.
Last March, Mitsubishi Motors and France's PSA Peugeot Citroen dropped talks over a possible capital tie-up that many believed could secure a more stable future for the embattled car makers, with Masuko citing bad timing coming in the wake of a global economic crisis.
Masuko has said the automaker would aim instead to strengthen its financial standing by boosting sales -- a stance he maintained on Thursday. That would be done partly through operational alliances such as the supply deals it has with PSA and Nissan Motor Co.
"We will aim to boost sales with globally competitive vehicles such as compact models that meet the needs of the middle class in emerging markets, as well as SUVs that appeal to customers across many regions, including mature markets," Masuko said at the news conference.
Under the growth plan, the maker of the Pajero SUV said it would aim to double its operating profit to 90 billion yen and triple its net profit to 45 billion yen by 2013/14 compared with its forecasts for the current year ending March 31.
It aims to boost revenues to 2.5 trillion yen from 1.90 trillion yen, assuming a dollar rate of 90 yen and the euro at 110 yen.
Shares in Mitsubishi Motors briefly rose 1.7 percent to 120 yen after the news. By late afternoon in Tokyo they were up 0.9 percent at 119 yen.
8 MORE PHV, EVs IN 5 YEARS
To get there, the company said it would aim to cut procurement costs by 90 billion yen by 2013/14, including by buying more components outside Japan to counter currency headwinds. It would also slim down the number of vehicle platforms, to six in 2015/16 from 12 now.
Volume growth will be driven by China, Southeast Asia, Russia and Brazil, where Mitsubishi Motors expects the upcoming "Global Small" car and other models to account for a 280,000-unit sales rise in emerging markets over the next three years.
It expects a 90,000-unit increase in sales in mature markets.
Mitsubishi Motors also said it plans to add a combined eight plug-in hybrid and pure electric vehicles to its line-up by the year ending in March 2015.
Mitsubishi Motors became the first major automaker to mass-produce a battery-run electric vehicle with its i-MiEV hatchback, first to fleet customers in 2009 and to individuals early last year.
Mitsubishi Motors is owned 15 percent by Mitsubishi Heavy Industries Ltd and 14 percent by Mitsubishi Corp.
(Editing by Michael Watson)