Mitsubishi Motors Announces FY2005 Full-year Results, FY2006 Forecasts & Operational Plans.

Tokyo, Japan, Apr 27, 2006 - (JCN Newswire) - Mitsubishi Motors Corporation (MMC) today announced its full-year results for the year ending March 31, 2006, together with forecasts and operational plans for the year ending March 31, 2007.

Mitsubishi Motors' consolidated sales for fiscal 2005 totaled 2,120.1 billion yen, virtually the same level as last year's 2,122.6 billion yen (down 2.5 billion yen, 0.1%). The decrease in sales mainly reflects lower OEM supply volumes in North America and Europe that were not completely offset by increased revenues in Japan driven by the introduction of new models.

Mitsubishi Motors posted operating income of 6.8 billion yen, an improvement of 135.3 billion yen over last year and the company's first full-term operating income since fiscal 2002. Factors contributing to this improvement include better retail unit volumes/model profitability mix, and the weaker yen. These were complemented by a number of other favorable factors, including: lower sales promotion costs, advertising costs in the U.S. and Europe in particular; lower warranty expenses in Japan; lower depreciation costs as a result of asset impairment charges taken in the U.S. and Australia during the previous fiscal year; and the non-recurrence of one-time charges resulting from the sales of sales-finance receivables in the company's U.S. financial services subsidiary.

Mitsubishi Motors posted an ordinary loss of 17.8 billion yen, a year-on-year improvement of 161.4 billion yen, and a net loss of 92.2 billion yen, an improvement of 382.6 billion yen. The smaller ordinary loss stems mainly from the improvement in operating earnings detailed above together with improved earnings at equity method affiliates and the non-recurrence of costs associated with the issuance of new shares booked as non-operating expenses last year. For the net for the period, the booking as extraordinary losses of asset impairment accounting charges in Japan and the booking of additional asset impairment charges in the U.S. and Australia where a recovery in sales is expected to take more time, and of restructuring costs.

2)Sales volume

Global market sales of Mitsubishi Motors vehicles in fiscal 2005 totaled 1,344,000 vehicles, a 2.4% increase of 31,000 on the 1,313,000 sold last year, the first year-on-year increase since fiscal 2002.

In Japan, MMC sold 257,000 vehicles, a 13.2% year-on-year increase, 30,000 units, that reflected strong sales of the new Outlander and i models introduced in the second half of the year.

In North America, the company sold 156,000 vehicles, a 10.3% decline or 18,000 fewer than last year. Sales grew steadily in Mexico and Puerto Rico but failed to counter the slow performance in the United States. In response to the weak recovery in the U.S. market, MMC reinforced a management structure for the market in January. Together with this management change, a new system encompassing sales, product development, and production is bringing local operations closer in contact with headquarters in Japan, making quicker responses to changes in market conditions possible. Recent new dealer support policies are bringing sales higher, and the true recovery is beginning.

In Europe, Mitsubishi Motors sold 267,000 vehicles, a 10.8% increase, 26,000 units, driven by robust sales in Russia, where sales grew by over 50%, and in the large volume markets of Germany and the U.K.

In Asia and other regions, MMC sold 664,000 vehicles, a 1.0% decline or 7,000 fewer than last year. Firm growth in Thailand, Latin America, the Middle East, and Africa was more than offset by a drop in sales in Malaysia, where the government is promoting sales of domestically produced vehicles, and in Indonesia with its sluggish economy.

FY2005 achievements (against targets announced November 10, 2005)

1) Financial results

- Net sales in fiscal 2005 were on a similar level to those of fiscal 2004 and some 100 billion yen under target due mainly to lower OEM sales in overseas markets.

- Operating income was more than 20 billion yen better than the forecasted loss of 14 billion yen and returned to the black a year earlier than the target set out in the Mitsubishi Motors Revitalization Plan announced January 28, 2005.

- Ordinary income remained in negative territory but showed an upward swing against targets similar in scale to that of operating income.

- Net loss was 28.2 billion yen worse than target due to the booking of larger extraordinary losses than planned in order to solidify operations on a new and stronger base. The larger extraordinary losses include: an increase in asset impairment accounting charges associated with the fall in market value of land owned by sales companies in Japan; the taking of further asset impairment losses above those made last year due to the continuing delay in sales recovery in North America and Australia; and restructuring charges in North America related to consigned production activities to lessen the future fixed cost burden.

2) Sales volume

- Global retail unit volume totaled 1.344 million vehicles, 26,000 short of the 1.370 million announced forecast.

- Regionally, Japan saw volume surpass the forecast of 256,000 units by 1,000 vehicles. In North America, volume fell short against the 169,000 unit target by 13,000. European volume came in at 267,000 vehicles, higher by 13,000 than the 254,000 unit target. Lastly in Asia and other regions, results were below the 691,000 unit target by 27,000 units, for a total of 664,000 units.

Forecasts for fiscal 2006

On the strength of the introduction of a number of new models in fiscal 2006 scheduled in the revitalization plan, Mitsubishi Motors will aim to achieve the revitalization plan target of increasing global sales volume by 5% over fiscal 2005 to 1,408,000 units. Regional forecasts are the following. Japan: 302,000 vehicles, an 18% increase over the previous year; North America: 181,000 vehicles, a 16% increase; Europe: 271,000 vehicles, a slight increase; Asia and other regions: 654,000, a slight decrease. In terms of key financial figures, for fiscal 2006 Mitsubishi Motors forecasts total sales of 2,230.0 billion yen, a 5% increase, consummate with the volume increase, of 109.9 billion over last year. The company forecasts operating income of 43.0 billion yen, up 36.2 billion yen from fiscal 2005. Factors driving the increase include: upturns in unit volume/model profitability mix stemming from the introduction of new models in the lineup; reduced sales promotion spending; reductions in material costs; and cut backs in general administrative expenses. Also contributing to the improvement will be the beneficial effects of booking asset impairment charges and restructuring implemented in fiscal 2005. Mitsubishi Motors forecasts an ordinary profit of 21.0 billion yen, a year-on-year improvement of 38.8 billion yen, and a full-year net profit of 8 billion yen, an improvement of 100.2 billion yen.

Fiscal 2006 operational plans

Operational measures by region

1) Japan

- Introduce fully redesigned eK Wagon, Pajero and Delica models and of special editions of other models.

- Strengthening sales ability through stronger partnerships with sales companies.

- Restructuring sales networks.

2) North America

- Continue implementation of measures designed to normalize sales activities.

- Strengthen dealer marketing and selling capabilities through training.

- Consistent communication message.

- Effective financial services operations.

- Improve productivity at the company's U.S. production facility.

- Introduce new products that attract more customers & boost sales.

3) Europe

- Introduce a number of new cars throughout the fiscal year.

- Expand sales of current models.

- Maintain sales momentum in Germany, U.K and other volume markets.

- Expand sales in Russia, the Ukraine and other growth markets through the introduction of a full-size sedan.

4) Asia and other regions

- China: Make an equity investment in South East (Fujian) Motor Co., Ltd. Build up and extend company's operating base in China by expanding the Mitsubishi brand lineup.

- Thailand: Expand export shipments of new Triton 1-ton pickup model.

- Australia: Strengthen sales through the introduction of three new models (imports) and new trim versions of locally produced models.

- Latin America, Middle East and Africa: Boost sales through introduction of new 1-ton pickup model.

Progress in Mitsubishi Motors Revitalization Plan

1) Efforts to regain trust

Regaining the trust of customers and society at large together with improving profitability are major themes in the Mitsubishi Motors Revitalization Plan. To this end the company has aggressively implemented a number of initiatives which are already producing tangible results. In terms of regaining trust, the company has actively implemented the improvement measures announced in March last year aimed at preventing any recurrence of recall related issues. The company reports to the Business Ethics Committee which provides guidance and advice on the implementation of these measures.

2) Improving profitability

Mitsubishi Motors has recently reviewed regional sales volume and net sales targets through fiscal 2007 on the basis of sales performance in fiscal 2005. Specifically, the company has decided to leave unchanged the global sales volume target announced in the revitalization plan. Targets for the steadily recovering Japan market have been raised, while targets for North America, where sales will take longer to recover, have been adjusted. In addition, for China where market growth has started to slow and where competition is intensifying, targets have been adjusted. Overall, the company is aiming for stable and solid growth under the overall targets of the revitalization plan.

In terms of key financial figures, fiscal 2005 operating income exceeded the target announced on November 10, 2005 and returned to the black a year earlier than called for in the revitalization plan. For fiscal 2006 Mitsubishi Motors has upwardly revised the revitalization plan sales target by 70 billion yen but has left operating, ordinary and net income targets unchanged. The company has marked fiscal 2006 as the year in which net income moves into the black, a key target in the revitalization plan, and is working to further strengthen its profitability base.

Looking further forward to fiscal 2007, the company leaves unchanged the earnings targets set out in the revitalization plan, and sets sight on the target of sustainable profitability from 2007 onward.

About Mitsubishi Motors Corporation

Mitsubishi Motors Corporation (TSE: 7211) was established in 1970 and is one of the few automobile companies in the world that produces a full line of automotive products ranging from 660-cc mini cars and passenger cars to commercial vehicles and heavy-duty trucks and buses. The company also operates consumer financing services and provides this to its customer base.

Source: Mitsubishi Motors Corporation

Contact:

Mitsubishi Motors Media Center
https://media.mitsubishi-motors.com/index.php

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