Mitsubishi 2003 Annual Report Download - page 40

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ANNUAL REPORT 2003 POWER TO CHANGE
MANAGEMENT’S DISCUSSION AND ANALYSIS
CHANGES IN SCOPE OF CONSOLIDATION AND SUBSIDIARY ACCOUNTING PERIODS
The consolidated financial statements for fiscal 2002, the year ended March 31, 2003, are compiled from the accounts of MMC
and a total of 124 consolidated subsidiaries and 25 equity-method affiliates. MMC’s truck and bus operations, which were pre-
viously an operating division of the company, were spun off on January 6, 2003 as a separate company, Mitsubishi Fuso Truck and
Bus Corporation (MFTBC). On March 14, 2003, MMC sold 58% of its shares in MFTBC, as a result of which the latter company
became an equity-method affiliate of MMC. The Consolidated Statements of Operations contain the full-year results for the truck
and bus operations, but the Consolidated Balance Sheets reflect the status of MFTBC as an equity-method affiliate as of March
31, 2003, in line with which related assets and liabilities are not booked. The value of MMC’s stake in these truck and bus opera-
tions as of the fiscal 2002 year-end is included within investment in unconsolidated subsidiaries and affiliates.
Of the 124 consolidated subsidiaries, 62 are based overseas. To improve the transparency and quality of the consolidated
financial information disclosed, MMC moved the fiscal year-end of all 62 consolidated overseas subsidiaries from December
31 to March 31, effective from the fiscal year ended March 31, 2003. This move to unify accounting periods means that results
for these 62 consolidated overseas subsidiaries for the fiscal period ended March 31, 2003 reflect 15 months’ results.
In the following analysis, in cases where it is deemed important that a year-on-year comparison of real performance is
provided, the relevant calculations exclude the effects of this change of accounting period on the results of consolidated
overseas subsidiaries.
OPERATIONAL OVERVIEW
Total vehicle sales in the Japanese automotive industry in fiscal 2002 amounted to 5.86 million vehicles, roughly on a par with the
previous year. Exports surged, partly as a result of higher demand in Asian markets, rising 13% year-on-year to 4.8 million units.
MMC’s consolidated passenger car sales declined in Japan during fiscal 2002, although exports increased, principally to
Asia. Overseas, sales of passenger cars climbed in North America. Consolidated net sales grew by 21.4% to ¥3,884.9 billion.
Steady progress was achieved in the second year of the Turnaround in reducing costs, as a result of which the company was
able to post an operating profit of ¥82.8 billion and net income of ¥37.4 billion. This represented the successful achievement
of the operating profit target for the year and a return to sustainable profitability.
In sales terms, the inclusion of the extra three-month “bridge” period stemming from the change in accounting period at
consolidated overseas subsidiaries had the effect of increasing consolidated net sales by ¥433.4 billion. In profit terms, poor
market conditions in North America during the bridge period resulted in its inclusion reducing consolidated operating profit
by ¥10.0 billion. The corresponding negative impact on net income was ¥6.5 billion. Excluding these bridge-period effects,
consolidated net sales amounted to ¥3,451.5 billion, representing real year-on-year growth of 7.8%. On the same basis, the
operating profit increased by 2.3 times to ¥92.8 billion, and net income increased by 3.9 times to ¥43.9 billion.
RESULTS OF OPERATION
Net Sales and Operating Profit
✵Net sales
Consolidated net sales increased 21.4% to ¥3,884.9 billion. This marked the first increase in sales since the fiscal year ended
March 1998. Although passenger car sales in Japan declined by 50,000 units to 354,000 units, increases in sales across North
America, Europe, Asia and the rest of the world contributed to overall growth in sales in the Passenger Car Division of 25.4%,
to ¥3,160.6 billion. Sales of commercial vehicles increased 3.2% in Japan. Combined with brisk export sales, this resulted in
total sales in the Truck & Bus Division of ¥724.3 billion, an increase of 6.4% relative to the previous year.