Mitsubishi 2009 Annual Report Download - page 34

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08
07
06
05
04
–94.8
–48.9
–46.0
–84.8
–34.2
–120 –100 –80 –60 –40 –20 0
-150 -100 -50 0 50 100 150 200
08
07
06
05
04
–93.3
188.3
162.3
54.4
13.7
Cash Flows from Investing ActivitiesCash Flows from Operating Activities
(FY)
(FY)
(¥ billion)(¥ billion)
•Europe
In Europe, a substantial drop in vehicle sales resulted in net sales
of ¥356.1 billion (down 45.8% compared to the previous fiscal
year) and an operating loss of ¥4.5 billion (down from an operat-
ing income of ¥20.3 billion).
•Asia/OtherRegions
In Asia and Other Regions, as a result of lower vehicle sales, net
sales fell to ¥478.4 billion (down 15.4% compared to the previous
fiscal year). On the other hand, operating income rose to ¥21.7
billion (an increase of 42.7%) owing to favorable exchange rates
and improvements stemming from lower fixed costs following the
closure of the Australian factory.
Cash flows
The year-end balance of cash and cash equivalents was ¥154.7
billion, a decrease of ¥206.2 billion from the beginning of the
fiscal year.
Cash flow from operating activities came to a net outflow of
¥93.3 billion, an increase in outflow of ¥281.6 billion compared to
the previous fiscal year due mainly to decreased working capital
and increased finance receivables.
Cash flow from investing activities came to a net outflow of
¥94.8 billion (an increase in outflow of ¥45.9 billion year-on year)
due mainly to capital expenditures.
Finally, cash flow from financing activities totaled a net out-
flow of ¥5.0 billion (a ¥127.6 billion decrease in outflow compared
to the previous fiscal year).
Business-related Risks
Risks related to MMC’s business, as well as factors that could
possibly affect the judgment of investors are as follows:
Forward-looking statements are based on the judgment of
the MMC Group as of the end of the fiscal year 2008.
Leasing, financial services and sales incentives
Overcapacity in the auto industry, and fierce competition, espe-
cially price competition in the North American market, has led to
the necessity of sales incentives in sales promotion efforts.
The sales incentives MMC uses in promotions reduce the
selling price of new vehicles. It is possible that the use of incen-
tives will lower resale values in the used car market and residual
values evaluated for vehicles returned at the end of leases. If
vehicle residual values decrease, there could be a negative
impact on future business performance. The decline in residual
values could also put downward pressure on car and lease assets
held as collateral in the sales finance unit.
Issuance of common and preferred shares
and effect on share price
In June and July 2004, March 2005, and January 2006 MMC
issued several classes of convertible preferred shares. The con-
version of all Class B shares, series 1 – 3 (issued July 2004), has
already been completed, but the possible conversion of the
remaining Class A & G shares to common shares in the future will
dilute the value of existing common shares, and thus possibly
influence the market price of common shares.
32 MITSUBISHI MOTORS CORPORATION Annual Report 2009