Mitsubishi reports an 89% drop in annual profit

TOKYO — Mitsubishi will focus on cutting fixed costs by 20% or more in the next two years after reporting an 89% drop in annual profit, its weakest performance in three years, and skipping its year-end dividend.

The coronavirus crisis has exacerbated Mitsubishi’s struggles in a year where Japan’s sixth biggest carmaker was already battling falling sales in China and also southeast Asia, its largest market which accounts for one-quarter of sales.

Mitsubishi also said on Tuesday it would focus on growth in ASEAN countries to survive the aftermath of the pandemic.

“Before the virus we had been mulling which underperforming regions and vehicle segments to cut our exposure to,” CEO Takao Kato told a results teleconference.

“In the wake of the virus, we need to pick up the pace of making these changes. To stay competitive in a post-coronavirus market, we need to immediately shrink our area of focus to regions and segments in which we excel.”

Global automakers are struggling to cope with the crisis, which has pummeled car sales due to lockdowns in many countries.

Many automakers have begun to restart vehicle factories, but anemic demand, supply chain disruptions and social distancing measures at factories are expected to limit output.

Mitsubishi’s operating profit came in at 12.8 billion yen ($119.21 million) for the year to end March, down from 111.8 billion yen a year ago, and its lowest since the year to end March 2017. Profits exceeded a consensus estimate of 9.4 billion yen profit drawn from 15 analysts polled by Refinitiv.

The automaker did not give an earnings forecast for the current business year, and did not issue a year-end dividend, compared with 10 yen per share a year ago.

The junior member of the automaking partnership between Nissan and France’s Renault, sold 1.13 million vehicles globally in the year ended March, down 9%.

Mitsubishi will focus on growth in southeast Asia as part of the alliance’s plan for each company to expand in their regions of strength. Mitsubishi said it would give more details when it reports first-quarter results.

The alliance is expected to announce a revamped strategy on May 27, when it will pledge to increase cooperation to improve joint operations to remain competitive.

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