Mitsubishi 2008 Annual Report Download - page 13

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annual report 2008 mitsubishi motors corporation
strengthening relationships with business partners and standard-
izing more parts and components across vehicle models. Along
with this, we are stepping up efforts to reduce costs from the
initial development stage onwards.
Capital Investment and R&D Expenditures
MMC aggressively invests in fields expected to become
sources of sustainable growth in the future, including environ-
mental technologies and emerging markets.
Our policy on capital expenditures is to maximize benefits
by utilizing existing assets to hold down new investment. To
illustrate, we are reinforcing our product lineup by, among
other things, expanding the rollout of vehicles built on our
mid-sized platform, which has won consumer confidence with
the
Outlander , Delica D:5 and Lancer . Additionally, we will
secure necessary production capacity without heavy new
investment by utilizing the existing facilities of our Netherlands
plant. Furthermore, we are constructing a new painting facility
at our Okazaki Plant to boost productivity and to further
reduce the environmental impact of our manufacturing pro-
cesses. We are also increasing investment in upgrading our
production framework, increasing both vehicle and component
production capacity to meet rising demand.
Regarding R&D, we are focusing on strengthening MMC’s
unique technologies. Measures include expanding our SUV and
super all-wheel control (S-AWC)* technologies. We are boosting
development efficiency by applying existing technologies while
focusing development efforts on electric vehicles, clean diesel
engines and other environmentally friendly technologies.
* S-AWC: An advanced vehicle dynamics control system that regulates drive
torque and braking force at each wheel
Financial Strategy
In terms of financial strategy, MMC will efficiently procure
funds needed for proactive capital investment and R&D. We
will rely on loans as our primary fund raising method, but will
work at the same time to improve cash flow. As a result, interest-
bearing debt at the end of fiscal year 2010 is projected at
mostly the same level as at the end of fiscal year 2007. As for
capital strategy, which is a particularly important issue for the
company at this time, we will follow the Step Up 2010 plan
with a view to resuming dividend payments in the future.
We expect the initiatives that have already been executed
under Step Up 2010 to steadily bear fruit. Looking at fiscal
year 2008 alone, the business environment is shaping up to be
challenging, including adverse foreign exchange rate move-
ments and further increases in raw materials costs. Conse-
quently, we are forecasting lower sales and earnings for the full
fiscal year. Over the medium and long term, however, we are
confident that the steady execution of these programs will
make MMC more resilient to changes in the operating environ-
ment and enhance its ability to generate steady profits, thereby
realizing the construction of a foundation for sustainable
growth over the long term.
September 2008
Osamu Masuko
President
Factors Behind Changes in Operating Income
(FY2007 Versus FY2010)
FY2007
¥108.6
billion
FY2010
Target
¥90.0
billion
Model mix
฀New models
฀More built-up
vehicles, etc.
฀Lower materials costs
฀Process restructuring,
etc.
 Environmental technology
 New products, etc.
 Assumed forex rate
FY07 FY10
USD 115 105
EUR 162 155
AUD 100 90
฀Restructuring of Australian
operations
฀Switch to proprietary diesel
engine, etc.
Operational
improve-
ments
Cost
cutting
Forex
R&D expenses
Depreciation