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24
OPERATIONAL OVERVIEW
Total vehicle sales in the Japanese automotive industry in fiscal 2003, amounted to 5.89 million vehicles, roughly on
par with the previous fiscal year. Year-on-year exports also remained flat, totaling 4.77 million units, with growth in
sales to Asia and Europe offset by the decline in exports to North America.
Against this backdrop, MMC introduced the new concept model GRANDIS and worked to realize optimal busi-
ness processes. The Company completed the final year of its Turnaround, a three-year plan that was implemented in
2001 and designed to further strengthen business activities, enhance brand power, improve product development,
reduce costs, ensure greater selection and focus on core businesses, and optimize the operating process. On the earnings
front, however, MMC fell well short of its original profit target, impacted by intense competition in the United States,
the loss recorded by its U.S.-based finance subsidiary, and other factors.
RESULTS OF OPERATIONS
Net Sales, Operating Profit, Ordinary Profit and Net Income
In the fiscal year under review, consolidated net sales decreased ¥1,365.4 billion, or 35.1%, to ¥2,519.4 billion due in
large part to the spin-off of its truck and bus business* and steps to align the fiscal year closing dates at consolidated
overseas subsidiaries in FY2002**. Adjusting for a full year’s impact from the spin-off of the Company’s truck and bus
operations (¥715.3 billion) and the absence of one-off figures attributed to the change in accounting period at consoli-
dated overseas subsidiaries (¥433.4 billion), consolidated net sales fell 7.9% year on year. In terms of profits, MMC
recorded an operating loss of ¥96.9 billion, down ¥179.6 billion from the operating profit in the previous fiscal year.
Despite the positive effect of cost reductions and the impact of favorable movements in euro exchange rates, these factors
were more than offset by the drop in unit sales, primarily reflecting intense competition in the U.S. market, a tightening
of credit standards, an increase in sales and promotional expenses, and an increase in allowance for doubtful accounts
relating to sales finance. Again, excluding the impact of the spin-off of truck and bus operations (operating profit of
¥8.8 billion) and the change in accounting period at consolidated overseas subsidiaries (operating loss of ¥10.0 billion),
operating profit for the fiscal year under review declined ¥180.8 billion.
Consolidated ordinary profit dropped ¥164.6 billion to an ordinary loss of ¥110.3 billion. Excluding the impact of
the change in accounting period at consolidated overseas subsidiaries, totaling losses of ¥13.1 billion, ordinary profit
declined ¥177.7 billion.
FINANCIAL REVIEW
01
(FY)
02 03
4,000
3,000
2,000
1,000
001
(FY)
02 03
1,500
1,200
900
600
300
0
01
(FY)
02 03
100
50
0
-50
-100 01
(FY)
02 03
40
20
0
-20
-220
NET SALES
(¥ billion)
OPERATING PROFIT
(LOSS)
(¥ billion)
NET INCOME
(LOSS)
(¥ billion)
INTEREST-BEARING DEBT
(¥ billion)