Mitsubishi Motors sees bigger loss than estimated amid virus

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TOKYO (July 27): Mitsubishi Motors Corp predicted a bigger full-year loss than analysts estimated and unveiled a fresh restructuring plan as the coronavirus pandemic hindered its efforts to get back on track.

The carmaker’s operating loss for the year ending March 2021 will be ¥140 billion (US$1.3 billion or RM5.65 billion), it said in a statement today. Analysts predicted a loss of ¥54.7 billion, according to the average of estimates compiled by Bloomberg. The carmaker said it will close a plant in Japan assembling Pajero sport utility vehicles (SUVs) in a bid to reduce costs.

Mitsubishi and alliance partners Nissan Motor Co and Renault SA are struggling to revive demand after the virus outbreak shut factories and showrooms. The automakers were already hit with the shock arrest of former leader Carlos Ghosn in late 2018, and are now forced to reduce costs to support earnings just as a shift into electrification and self-driving cars requires increased investment.

“The impact is more serious this time than during the financial crisis” a dozen years ago, Mitsubishi chief executive officer (CEO) Takao Kato said on a call with reporters.

Shares in Mitsubishi fell 3.2% in Tokyo. The stock has lost 41% this year.

The new recovery plan includes a reduction in fixed expenses of more than 20% and a fresh focus on Southeast Asia. The company will slash indirect labour cost by 15% through buyouts and salary revisions. It won’t pay a dividend this quarter.

The Pajero factory to be shuttered also makes Delica D:5 vans and Outlander SUVs. It produced about 63,000 vehicles last year, making up approximately 10% of Mitsubishi’s domestic output, according to Nikkei.