Mitsubishi expects more losses
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Eckrodt said the loss forecast is a "clear disappointment" for the company.
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TOKYO, Japan (Reuters) -- Embattled Japanese auto maker Mitsubishi Motors has lifted its full-year loss forecast, citing a plunge in key U.S. sales, as rumors swirled that its German chief executive would be pushed out.
Dogged by financial woes stemming from loose credit controls in North America, Mitsubishi Motors, 37 percent held by DaimlerChrysler, said it would set aside another big extraordinary provision, leading to a larger loss in what was meant to be the final year of three years of restructuring.
"This is a clear disappointment for us, for our partners and for our shareholders," Chief Executive Rolf Eckrodt told a news conference. "I take this result extremely seriously."
Barely a year after Eckrodt declared the company "back on track," Japan's fourth-largest auto maker said it would draw up a new mid-term business plan by April 30 that would likely include a capital increase supported by its main shareholders.
That poses a big headache for DaimlerChrysler, which faces the more urgent task of reviving its tattered U.S. Chrysler arm. The German-U.S. auto maker, reporting 2003 results Thursday, said Chrysler had missed its target to break even last year after spending a fortune on restructuring efforts.
Analysts said the picture looked as bleak for Mitsubishi.
"It all started with the recall scandal. Then it ran into a disaster in the United States through its credit policies, and now, in both Japan and overseas, it has few attractive models," said Akihide Kinugawa, fund manager at T&D Asset Management.
"It's hard to find any positives about Mitsubishi right now."
Just three months ago, Mitsubishi slashed its earnings forecasts to account for its dismal performance in North America -- until recently its only source of profit -- where its loans to risky borrowers backfired.
But the auto maker again slashed its North American sales forecast, saying the region would post an operating loss of ¥145 billion ($1.36 billion) in the year to March 31, a far cry from the ¥102 billion profit last year.
While insiders say Eckrodt's imminent departure was a foregone conclusion, the former Mercedes-Benz veteran said he was eager to stay on to fulfill his mission of reviving the company.
"Of course I feel responsible. I would be stupid not to. But I haven't lost my motivation to help Mitsubishi Motors," he said. "I'm willing to fight and stay to do my duties, but the rest is up to the shareholders."
Still, he hinted his term could be cut short in June, when he will have been at the helm for two years, which he said was the "normal" term for Japanese company presidents.
Insiders say a new president could be announced at an extraordinary shareholders' meeting scheduled for April 30.
On that day Mitsubishi will announce details of its new business plan as well as preliminary full-year results, which are now expected to show an operating loss of ¥105 billion instead of the ¥45 billion forecast three months ago, and a net loss of ¥72 billion instead of ¥11 billion.
Last year, it made an operating profit of ¥82.76 billion and a net profit of ¥37.36 billion.
Copyright 2004
Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
