Mitsubishi 2006 Annual Report Download - page 7

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MITSUBISHI MOTORS CORPORATION ANNUAL REPORT 2006
Takashi Nishioka
Chairman of the Board
Osamu Masuko
President
To Our Shareholders and Stakeholders
The main points of MMC’s performance in fiscal year 2005 were as follows:
1. Sales Volume Driven by the Japanese and European Markets
In fiscal year 2005, sales volume increased 2.4% year-on-year to 1,344,000 vehicles, reaching 98% of targets.
In the Japanese market, MMC launched two new models that have received strong praise from numerous
customers—the new
Outlander SUV and the new i minicar. Launched in October 2005, Outlander recorded sales
of 19,000 units in the six months leading to the end of March 2006, more than 50% higher than target.
i got off
to a steady start, too, selling 16,000 units in only two months following its January 2006 debut. With the strong
sales of these two models, we feel that we have made strides in winning back the confidence of customers and
taken decisive first steps in revitalizing the company. Also, sales volumes were strong in main European markets
such as Germany and the U.K., and volumes grew briskly in Russia, the Ukraine, Central & South America, the
Middle East and Africa.
2. Operating Profitability Restored
As mentioned earlier, we achieved our target of restoring operating profitability one year ahead of schedule,
despite a 0.1% year-on-year decrease in net sales to ¥2,120.1 billion, 4.5% lower than target. Operating income
was ¥6.8 billion, more than ¥20.0 billion better than the operating loss initially projected for the fiscal year. This
partly reflected cost reduction efforts and favorable exchange rates as the yen weakened.
3. Sales Bottomed Out in the Important U.S. Market
MMC’s sales have been slow to improve in the U.S. and Australian markets. To further ensure sound profitability
in both these markets and provide for the risk of potential losses, MMC decided to book additional asset impair-
ment losses in fiscal year 2005. Consequently, we posted a net loss of ¥92.2 billion for the fiscal year, which was
worse than target. In the large U.S. market, we dispatched numerous management personnel from Japan, includ-
ing Hiroshi Harunari as President & CEO of our U.S. subsidiary. This was done to conduct sweeping reforms of our
operating structure, including enhancement of communication between parent company and U.S. operations as
well as communication with distributors. As a result, U.S. sales volumes have improved year on year since April
2006, suggesting that sales have bottomed out and business is recovering.
In fiscal year 2006, we will strive to reach even more ambitious goals. We are targeting sales volume of
1,408,000 vehicles, roughly 5% higher than in fiscal year 2005, with the goal of bringing operating income,
ordinary income, and net income fully into the black. For the first quarter of fiscal year 2006, MMC posted an
operating loss of ¥6.8 billion. However, an operating loss of ¥9.0 billion in the first half was originally planned,
and positive profitability planned for the second half. Therefore, we believe that MMC is largely on track to
meeting forecasts. While we must rapidly respond to market conditions including declining demand in ASEAN
countries, such as Indonesia and Thailand, due to the impact of high crude oil prices and other factors, there are
many exciting developments to which to look forward. Sales are improving in the U.S., we will unveil more
Mitsubishi-brand vehicles in China, and the
Outlander SUV and Triton (L200) one-ton pickup truck models will
be introduced to more markets worldwide. We anticipate reporting even more favorable news next year.
September 2006