July 24, 2018 / 9:32 AM / a year ago

Mitsubishi Motors first quarter profit jumps 36 percent on strong Asia sales

TOKYO (Reuters) - Mitsubishi Motors Corp (7211.T) on Tuesday said operating profit rose 36 percent in its first quarter, beating estimates, as strong sales in Asia helped drive the Japanese automaker’s recovery from a domestic mileage cheating scandal in 2016.

FILE PHOTO: The logo of Mitsubishi Motors Corp. is pictured at the 45th Tokyo Motor Show in Tokyo, Japan October 25, 2017. REUTERS/Toru Hanai/File Photo

Operating profit at Japan’s sixth-biggest automaker was 28.1 billion yen ($252.65 million) for April-June, compared with a 25.9 billion yen average of four analyst estimates compiled by Thomson Reuters I/B/E/S.

The result comes as Mitsubishi Motors slowly wins back customers at home - where sales rose 11 percent in the quarter - after its admission in 2016 that it had overstated mileage readings on domestic models shook trust in the company.

Sales in Southeast Asia rose 28 percent, and the automaker’s strength in the region has bolstered investors’ expectations on a strong recovery from the scandal, making Mitsubishi Motors the best-performing stock among major Japanese automakers over the past three months.

In that period, its shares have climbed 17 percent, beating a 10 percent slide at Nissan Motor Co Ltd (7201.T) - which owns a controlling stake in the automaker - and a 3 percent rise at Toyota Motor Corp (7203.T).

Behind the sales jump in Southeast Asia were brisk sales of the recently launched Xpander multipurpose vehicle, which has been selling strongly in Indonesia and which Mitsubishi Motors has begun to export to other Asian markets.

Southeast Asia is a key market for the Japanese automaker, accounting for nearly half of its global vehicle sales. The strong Xpander sales in Indonesia have doubled its market share in the country to around 14 percent since January.

Across member states of the Association of Southeast Asian Nations (ASEAN), Mitsubishi Motors boasts a market share of around 7 percent, trailing only much bigger rivals Toyota and Honda Motor Co Ltd (7267.T).

At home, sales have been lifted by strong performance of its newest model, the Eclipse Cross compact sport utility vehicle, launched in March.

In China and Taiwan, sales rose 37 percent on the year, due to strong sales of the Outlander SUV.

The automaker is also making inroads in North America, where sales rose 25 percent. Mitsubishi Motors has been struggling to expand in the United States in past years, resulting in the shuttering of its only plant in the country in 2016, and is now dependent on imports for new sales in the market.

In the U.S., the prospect of a hike in import tariffs to 25 percent from 10 percent could stymie Mitsubishi Motors’ plans to boost sales in the country by around 15 percent this year to 110,000 units.

($1 = 111.2200 yen)

Reporting by Naomi TajitsuEditing by Christopher Cushing

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