TOKYO – Mitsubishi Motors Corp. reported an 86 percent tumble in operating profit in the latest quarter as falling revenue, foreign exchange losses and rising r&d costs undercut earnings.
Mitsubishi’s operating profit plunged to 3.9 billion yen ($36.2 million) in the fiscal first quarter ended June 30, the Japanese automaker said in its July 24 earnings report. Operating profit margin shriveled to a paltry 0.7 percent in the period, from 5 percent a year earlier.
Net income dropped 67 percent to 9.3 billion yen ($86.2 million).
Revenue declined 4 percent to 536.2 billion yen ($4.97 billion), as worldwide retail sales added 2 percent to 298,000 units, gaining ground in Japan, China and Southeast Asia.
Mitsubishi partly cited falling wholesale deliveries and deteriorating model mix for the falling quarterly profits. Wholesale volume dropped 2.1 percent to 329,000 units in the quarter as Mitsubishi worked to rein in bloated inventories worldwide, including in the U.S.
The Japanese yen’s appreciation against the euro and Thai baht also hit results. Finally, Mitsubishi said rising outlays for r&d and labor expenses further depressed earnings.
Mitsubishi boosted r&d spending by 15 percent in the first quarter, compared with the year before. It wants to increase that investment 13 percent for the entire fiscal year.
North America’s regional operating loss widened to 5.1 billion yen ($47.3 million) in the April-June period, from a loss of 2.7 billion yen ($25.0 million) the year before.
North American sales retreated 6.7 percent to 42,000 million units.
Sales in Europe rose 5.5 percent to 58,000 units in the quarter, but Europe fell to an operating loss of 2.4 billion yen ($22.3 million) from a profit of 2.5 billion yen ($23.2 million) a year earlier.
Mitsubishi kept its previously announced earnings outlook for operating profit to decline 19 percent in the current fiscal year ending March 31, 2020, with net income dropping 51 percent.
Net income will fall more dramatically when compared to results that were bolstered in the just-ended fiscal year by a windfall U.S. income-tax gain, the company said.
Results will also be hit by unfavorable foreign exchange rates and rising r&d outlays.
-- Naoto Okamura contributed to this report.
