Mitsubishi (Part 2): Europe and U.S. business contribute to profit
Cleanup of preferred shares and resumption of dividends after 16 years
This second report on Mitsubishi Motors Corporation focuses on its steadily expanding business as stated in its consolidated financial results for the fiscal year ended in March 2014 (FY 2013) and for April-June 2014. Also reported below are its sales and earnings by region, capital-restructuring plan executed in early 2014, and the resumption of dividends that had been suspended for 16 years.
Mitsubishi is experiencing steady recovery of its business. The company's consolidated operating income in FY 2013 increased by 83.2% year-on-year (y/y). The net sales increased 25.5% while the operating income increased 93.1% y/y in April-June 2014. Mitsubishi has set the goal of an operating income of JPY 135 billion in FY 2016 in its New Mid-Term Business Plan. The company is confident that it will achieve the goal in FY 2014, two years ahead of time.
The New Mid-Term Business Plan announced in November 2013 calls for growth strategy based on emerging markets, especially in the ASEAN region. However, Mitsubishi's sales volume and earnings in Asia have come to a temporary standstill because of the sluggish sales in Thailand that is the largest market among the fast growing markets in Asia.
In contrast, business is recovering in terms of sales and earnings in North America and Europe. Mitsubishi was experiencing deficits in North America but expects that it will return to break-even point in FY 2014. The company's business in Europe turned to a surplus in FY 2013. It registered an operating income of JPY 12.6 billion in April-June 2014 and Europe became the largest source of profit among all global regions. Mitsubishi intends to strengthen the recovering business in Europe into a second source of profit after ASEAN. The recovery of earnings in Europe and the United States is contributing to the company's strong consolidated performance.
Early in 2014, Mitsubishi procured JPY 254 billion through public stock offerings and allocation of new shares to third parties. Over 60% of preferred shares owned by four Mitsubishi group companies were cancelled and the remaining preferred shares were converted into common shares. Thus, Mitsubishi achieved a cleanup of all the preferred shares and resumed dividend payments that it had suspended for 16 years (The paid dividend was JPY 25 per share).
Related report: Mitsubishi (Part 1): Future revenue growth driven by new pickups and SUVs (posted in August 2014)