(Adds comments at briefing, more details)
TOKYO (AFX) - Mitsubishi Motors Corp reported its first operating profit in three years in the year ended March 31 and trimmed its net loss sharply although not as forecast as the company's North American operations continued to suffer.
But thanks to cost-cutting and rising vehicle sales at home and in Europe, Japan's fourth-largest automaker said it made an operating profit of 6.8 bln yen, reversing the year-earlier loss of 128.5 bln.
Mitsubishi cut its net loss to 92.2 bln yen from 474.8 bln, still wider than what it had expected due to weak North American operations.
'As sales in Europe and Japan are now improving, I think we were on the right track in the first year of our three-year turnaround plan,' Mitsubishi Motors chief financial officer Hiizu Ichikawa said at a news conference.
In January, the automaker projected full-year net loss of 64 bln yen and operating loss of 14 bln on revenue of 2.22 trln.
'Given the continued struggle in the North American business, we took necessary accounting treatment there to eliminate any hidden future risks,' said Ichikawa, explaining the bigger than expected net loss.
The automaker said it incurred 74 bln yen in charges including costs to write off the value of its US subsidiaries.
But that was just about a fourth of the 290 bln yen in charges Mitsubishi took in the year to March 2005 to restructure its operations and balance sheet.
Profitability improved despite revenue staying at 2.12 trln yen for the year, after the firm ended its original equipment manufacturer supply contract with DaimlerChrysler AG and its Dutch unit NedCar terminated a similar deal with Volvo.
Global sales of Mitsubishi-brand vehicles rose to 1.34 mln units from 1.31 mln units. That was still short of an earlier plan to sell 1.37 mln units due to sluggish sales in North America.
'It may take some time before we can fully rebuild the North American operation,' Ichikawa said.
For the current business year, Mitsubishi Motors forecasts net profit of 8 bln yen and operating profit of 43 bln on revenue of 2.23 trln, assuming global retail sales will reach 1.41 mln units.
'As committed, we aim to make a net profit in this fiscal year but we want to solidify our profit-generating capabilities more in the year to March 2008,' Ichikawa said.
yasuhiko.seki@xfn.com
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