Mitsubishi 2005 Annual Report Download - page 56

Annual Report 2005
54
MITSUBISHI MOTORS CORPORATION
(v) Cost reduction
A.MANPOWER
As the result of changes to the organization, increased work process efficiencies, rationalization of work processes and
natural attrition in personnel, MMC group’s headcount trimming program is on track and is forecast to achieve the
original targets. MMC group is also moving forward with further improvements in work process efficiencies.
B.MATERIAL COSTS
In views of the deterioration in the procurement market brought about by falling sales volumes and sharp rises in
raw material costs, the new plan aims to reduce material costs by ¥90 billion ($838 million) on a cumulative basis
by fiscal 2006 over fiscal 2003 levels. While this is a downward revision of the original target in the Business
Revitalization Plan, this figure maintains the 15% reduction called for in the plan.
(5) Corporate ideals and direction
Through a process of exhaustive analysis and discussion between cross-functional teams composed mainly of
younger employees and the departments concerned, the Corporate Revitalization Committee has looked in depth at
a number of issues that MMC group faces. This has allowed MMC group to formulate a new course of action; one
that clarifies to its stakeholders the ideals that underpin MMC group’s management as it drives forward in fulfilling
its responsibilities as a corporate citizen. These ideals are crystallized in the new corporate maxim: “Mitsubishi
Motors is dedicated to responsibly providing customers and society with driving pleasure and assured security.”
(6) Profit and loss targets
To reflect all the measures described above, the numerical targets set out in the Business Revitalization Plan and
covering the period up to fiscal 2006-consolidated net sales, operating profit, ordinary profit, net income for the
term are revised downwardly in the Mitsubishi Motors Revitalization Plan. The new plan forecasts notes that
although it will be difficult for MMC group to result in profit before the end of fiscal 2005, it will do so in fiscal
2006 and in fiscal 2007 will achieve a record net income for the term of ¥41 billion ($381 million).
(7) Support systems: Capital and funding reinforcements
(i) Capital reinforcement
With the full-support of four Mitsubishi group companies, during the fiscal year of 2004 MMC group made a capital
enhancement of ¥284.2 billion ($2,646 million) through the issue of new common and preferred stocks [Mitsubishi
Heavy Industries (MHI), ¥50 billion ($465 million); Mitsubishi Corporation, ¥70 billion ($651 million); The Bank of
Tokyo-Mitsubishi, ¥154 billion ($1,434 million) (of which ¥54 billion ($502 million) in a debt-for equity swap);
The Mitsubishi Trust and Banking Corporation, ¥10.2 billion ($94 million) (all yen in a debt-for-equity swap)].
As stated above, in the fiscal year of 2004 MMC group has adopted asset impairment accounting principles.
While this will lead to a deficiency in capital, the capital enhancement will enable the restoration of stockholders’
equity to an appropriate level and assist MMC group in establishing a healthy financial status. The capital increase
brought the combined holding of MHI, Mitsubishi Corporation, The Bank of Tokyo-Mitsubishi and The Mitsubishi
Trust and Banking Corporation in MMC to 34% as of March 10, 2005. Because this will also bring MHI’s holding
up to 15%, MMC plans to become an equity method affiliate of MHI in fiscal 2005.