Mitsubishi Motors losses to hit $3.4bn in FY2020 due to COVID

TOKYO — Mitsubishi Motors said on Monday it expects a group net loss of 360 billion yen ($3.4 billion) for the year ending March 2021, marking the second straight year of red ink, as sales cratered due to the coronavirus pandemic.

Mitsubishi, which is owned 34% by Nissan Motor, expects sales to drop 35% to 1.48 trillion yen, with volumes projected to fall 25% to 845,000 units.

By region, sales volume is projected to fall 19% in Southeast Asia — the company’s biggest market — 21% in Japan, 34% in North America and 47% in Europe. Sales in China are expected to stay flat.

For the April-June quarter, the Japanese automaker reported a 57% drop in sales to 229.5 billion yen. The net balance swung to a loss of 176.2 billion yen from a profit of 9.3 billion yen. It is booking a 115.9 billion yen impairment loss on its domestic production facilities, including factories located in Okazaki, Kyoto and Gifu.

In a sweeping restructuring, Mitsubishi will close the plant for the company’s flagship Pajero sport utility vehicle in Gifu Prefecture. Production will end this year. The company has also suspended a plan to release new models for Europe.

The automaker stopped producing the Pajero for the domestic market last year. The Pajero SUV, whose production will be discontinued, is different from Pajero Sport, a hot-selling SUV designed specifically for emerging markets. Production of Pajero Sport will continue in Thailand.

The closure of the Gifu plant represents the first shutdown of a domestic plant since 2001. It is one of three domestic factories for passenger car production, and has also been producing the Outlander SUV. The closure is expected to help the company streamline production and reduce costs as sales stagnate. In the last fiscal year, the plant turned out 63,000 units, accounting for 10% of the domestic production.

Mitsubishi will forego dividend payment for the current fiscal year, saying it will prioritize building up liquidity positions in light of short-term funding needs. The company paid a dividend of 10 yen per share in the last fiscal year.

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