Mitsubishi 2007 Annual Report Download - page 45

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Contents Role of the Finance Group Headquarters / Financial Results and Discussion /
Business-related Risks _______________________________________________________________ 43
Consolidated Balance Sheets _________________________________________________________ 48
Consolidated Statements of Operations _________________________________________________ 50
Consolidated Statements of Changes in Net Assets _______________________________________ 51
Consolidated Statements of Cash Flows ________________________________________________ 52
Notes to Consolidated Financial Statements _____________________________________________ 53
Report of Independent Auditors _______________________________________________________ 83
The second fiscal year of the Mitsubishi Motors Revitalization Plan ended on March 31, 2007. In addition to weak
sales in Japan, North Asia, and the ASEAN region, costs were higher for non-ferrous metals, petrochemicals, and
other raw materials. However, as a result of successive efforts to reduce costs Company-wide and favorable currency
movements, we achieved our goal of restoring net profitability. In fiscal year 2007, the final year of the Mitsubishi
Motors Revitalization Plan, we are reinforcing our earnings structure to build solid profitability. In this context, the
finance group has two major roles to play:
First, it is the group’s job to steer the company along the most direct road toward complete recovery. This involves
carefully monitoring quantitative financial data on MMC’s performance to analyze progress with various initiatives,
and to assure that results are being achieved in all aspects of the plan. By ascertaining quickly the financial status
of MMC’s entire operations and keeping a close eye on current and future earnings prospects, the finance group
aims to prevent the company from straying off the path to restoring profitability as set out in the revitalization plan.
MMC’s business environment is changing at a more rapid, dynamic pace than originally anticipated in terms of
economic conditions in various countries, as well as factors such as crude oil and raw materials prices, foreign
exchange markets, and interest rates. In this business environment, based on a precise analysis and understanding
of the course charted so far, the group must quickly steer MMC around various obstacles as measures to reach goals
are accelerated. Through objective self-assessment of the Company’s true capabilities on a daily basis, the group
also spotlights medium-term weaknesses and challenges.
Second, the finance group is focused on the vital task of securing the funds required for the revitalization
process. These funds are principally the capital needed to develop the new models that promise to be the main
driver of restored profitability. The revitalization plan calls for ¥490.0 billion in additional funding over three years.
At the end of fiscal year 2005, MMC had already raised ¥348.0 billion, mainly through share allocations and credit
provided by a government-affiliated financial institution. In fiscal year 2006, against the backdrop of its improving
creditworthiness, MMC resumed the procurement of new funds from private-sector financial institutions, raising a
total of ¥78 billion, including a syndicated loan totaling ¥56 billion from 31 participating financial institutions in
November 2006.
Looking ahead, while monitoring cash flow trends on a consolidated basis, the group will continue to raise the
funds required through closer communication with various market participants and partner financial institutions.
(¥ billion)
Progress on Fund Procurement Plan Announced on January 28, 2005
Three-Year Fund Procurement Plan Funds Procured in First Two Years of Plan
• Equity capital increases (excluding debt-equity swaps) 220.0 • Equity capital increases 250.0
• Asset divestitures or equity capital increases 30.0 • Borrowings, bond issues, and other sources 176.0
• Borrowings and other sources 240.0
Total 490.0 Total 426.0
In the next three years, starting from April 2008, one major management priority is to identify a way to normalize
the company’s irregular capital structure. To this end, the company intends to steadily put the finishing touches on
the Mitsubishi Motors Revitalization Plan and take the next step to enhance profitability well into the future.
Role of the Finance Group Headquarters
Financial Section
Role of the Finance Group Headquarters