TOKYO -- Mitsubishi Motors upgraded its full-year earnings guidance Tuesday thanks to a recovery in the Southeast Asian market and shrinking overhead costs, putting the company on course to potentially return to the black in fiscal 2021.
The Japanese automaker now projects a 330 billion yen ($3.14 billion) net loss for the year ending March. The figure represents an upgrade of 30 billion yen from the previous guidance, though it still dwarfs the 25.7 billion yen loss posted in fiscal 2019.
Sales are forecast to drop 36% to 1.46 trillion yen, down 20 billion yen from the last projection, with the projected operating loss narrowing by 40 billion yen to 100 billion yen. New auto sales in Southeast Asia had picked up since April following a pandemic-induced slump. Unit sales in Thailand gained for the first time in 18 months in November.
For the third quarter through December, Southeast Asia earned a 7.7 billion yen operating profit, a bright spot compared with the perennially loss-making U.S. and European markets.
But with Thailand and other Southeast Asian countries facing new waves of COVID-19 cases in December, Mitsubishi Motors reduced its annual sales forecast by 20,000 units. The new global projection shows sales declining by 29% to 802,000 vehicles in fiscal 2020.
Mitsubishi's medium-term plan, released in July, finalized the closure of a Japanese plant in Gifu Prefecture. In November, the company began offering voluntary retirement, and received 654 takers.
The automaker, which seeks to reduce fixed costs 20% by the end of fiscal 2021, appears to be on track to hit the target early.
"We expect to cut 18% by the end of the year through March 2021," said Chief Financial Officer Koji Ikeya. "Structural reforms are advancing more rapidly than anticipated, and we are firmly on the way to becoming profitable in the year ending March 2022."