Mitsubishi forecast a surprise profit in the year ahead despite falling into the red in the latest quarter, as it counts on cost cuts to offset a slide in global vehicle sales.
Mitsubishi Motors' sales have plunged at alarming rates - by 66 per cent in the key Russian market last quarter - interrupting its progress towards sustained growth with the help of sister companies in the Mitsubishi.
"Recovery is still going to take some time," President Osamu Masuko told a news conference.
“My sense is that our profits will improve not on the back of a growth in sales volumes or revenue, but rather that the emergency cost-cutting measures we started taking last October will help us secure a net profit.”
Mitsubishi shared ended up 3.4 per cent at 154 yen after its positive forecast.
President Masuko added that Russia and Ukraine would no longer be one of Mitsubishi Motors' growth centres. Instead, the automaker will rely more on markets such as Southeast Asia, Canada, Brazil, the Middle East and China.
Defying consensus forecasts, the company, best known for its Pajero and Outlander sport utility vehicles, forecast an operating profit of 30 billion yen ($310 million) and net profit of 5 billion yen for the financial year to the end of next March.
It is assuming a tougher dollar rate of 92 yen and euro of 116 yen, versus 101 and 144 last year.
Six analysts had forecast an average operating loss of 43 billion yen, and Mitsubishi Motors' shares ended up 3.4 percent at 154 yen after the news.
Also today, Toyota Motor Corp unit Daihatsu Motor forecast a 56 per cent drop in operating profit to 17 billion yen for 2009/10, short of a consensus forecast of 28 billion yen.
Mitsubishi, along with the rest of the industry, is rushing to reduce costs through pay cuts, fewer work days and by shelving certain projects. It also pulled out of the Dakar Rally in February.
Masuko said he expected the environment to remain tough for at least a few months, adding he hoped that discussions over the fate of General Motors and Chrysler would end "in a positive way" to eradicate uncertainty hanging over the sector, economy and consumer sentiment.
Reuters