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50 MITSUBISHI MOTORS CORPORATION ANNUAL REPORT 2006
For non-operating income (loss), MMC reported a loss of ¥24.6 billion, an improvement of ¥26.1 billion from the
previous fiscal year.
The reasons for the improvement included a ¥14.5 billion improvement in income (losses) from equity-method affili-
ates, and a decrease of ¥12.6 billion in stock issuance costs.
Meanwhile, MMC posted ¥45.1 billion for asset impairment charges taken in Japan, the U.S. and Australia, as well as
restructuring charges of ¥14.8 billion. In Japan, MMC adopted new asset impairment accounting standards which led to
losses totaling ¥26.2 billion for fiscal year 2005. This included an impairment loss of ¥21.9 billion reported in the first
half of the fiscal year, as well as subsequent impairment losses associated with a drop in the market value of land owned by
domestic sales companies. In the U.S. and Australia, regions where sales have been slow to improve, MMC booked addi-
tional impairment losses of ¥18.9 billion in fiscal year 2005, following impairment losses of ¥84.4 billion booked in fiscal
year 2004. MMC also took steps to mitigate the potential risk of future losses—the booking of the above restructuring
charges of ¥14.8 billion, for example, to reduce the future burden of fixed costs related to consigned production activities
in the U.S.
The above factors, combined with income tax charges for overseas subsidiaries, resulted in a net loss of ¥92.2 billion,
a ¥382.6 billion improvement over that in the previous fiscal year. However, this was worse than the forecasted net loss of
¥64.0 billion for fiscal year 2005 announced with first half earnings on November 10, 2005. Nevertheless, MMC believes
that these actions will help to build sound individual businesses and restore a stronger operating structure in fiscal year
2006 and beyond.
In light of the net loss for fiscal year 2005, MMC is forced to decide once again not to pay dividends for the fiscal year
under review.
Segment Analysis
<Business Segment Information>
MMC and its consolidated subsidiaries divide operations into two business segments: Automobiles and Financial Services.
쎱 Automobiles
In fiscal year 2005, sales in the automobile business declined 0.2% year-on-year to ¥2,080.9 billion. MMC recorded an
operating loss of ¥6.1 billion, a ¥98.2 billion improvement over the previous fiscal year. Retail sales rose 31,000 units,
2.4%, to 1,344,000 units, with overall growth driven by two new models launched in Japan in fiscal year 2005.
쎱 Financial Services
Mitsubishi Auto Credit-Lease Corporation (MCL) and U.S.-based Mitsubishi Motors Credit of America, Inc. (MMCA) con-
duct auto leasing, sales financing and related operations.
MMC holds an equity interest in MCL, a domestic equity method affiliate. In March 2006, Mitsubishi Corporation,
Diamond Lease Co., Ltd. and MMC reached a basic agreement concerning the strategic reorganization of MCL’s automotive
finance operations. MCL plans to begin services under a new structure in 2007.
As part of the Mitsubishi Motors Revitalization Plan, MMC shifted its U.S. financial services operations to a joint venture
business between MMCA and Merrill Lynch & Co. in July 2005.
In fiscal year 2005 revenues from financial services fell 2.5% year-on-year to ¥39.2 billion. MMC reported operating
income of ¥10.4 billion from the segment, an improvement of ¥31.5 billion from the previous fiscal year. This improve-
ment was mainly due to the absence of a loss of ¥10.4 billion on the sale of finance receivables booked in fiscal year 2004.
<Geographical Segment Information>
The geographical segment analysis provided in this section is based on the results aggregated by the region of the whole-
saler and end user. Accordingly, figures differ from the ‘Geographic Segment Information’ section provided in the Notes to
Consolidated Financial Statements. Figures in this section correspond to the sales figures reported in the ‘Overseas Sales’
section in the Notes to Consolidated Financial Statements.
쎱 Japan
In Japan, retail sales rose 30,000 units, 13.2% year-on-year, to 257,000 units in fiscal year 2005. Sales had increased
year-on-year for 11 consecutive months as of the end March 2006 (since May 2005). The main reasons for the increase
were the strong starts for the new
Outlander
SUV and the new
i
minicar, which were launched in October 2005 and January
2006 respectively.
Consequently, in Japan, sales increased 22.1% to ¥504.1 billion and operating loss improved ¥41.7 billion to a ¥55.3
billion loss.