Mitsubishi Decelerates To Steady Pace

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Mitsubishi decelerates to steady pace towards break even

Rob McEniry aims to bring the company gradually back to profitability.

November 24, 2006

MITSUBISHI Motors Australia has stripped more than $100 million out of its annual operating costs and is on track to break even in about three years.

While current sales levels of the 380 model meant the manufacturing operation was still a "burden", chief executive Rob McEniry yesterday said the restructuring of the company was virtually complete.

Speaking after the company posted a $226 million loss for the year to March 31, Mr McEniry said there were still some asset write-downs that would affect the 2006-07 result, although none was as large as the $117 million charge booked last year.

"We won't break even in 2006-07 but it will be a very significant improvement and we will be in a very good cash position, which is the main thing," he said, while hosting the launch of the new Outlander model in Tasmania.

The Outlander is the fifth new model to be released in the past 12 months, and there are still more imported models to be introduced in coming months.

MMAL was generating cash surpluses and was not in need of any big capital injections Mr McEniry said, even though shareholder funds had dwindled to $12.6 million by March 31.

"We have paid back loans worth $70 million this year and as long as we can keep the cash flow going properly and reduce debt, we have a lot of new products coming, with the expectation of an increase in sales."

Mr McEniry said he was planning for MMAL to become profitable in stages, first before interest, tax and depreciation, then before interest and tax, and finally to make a net profit.

He said each step might take about 12 months, although the timing was variable due to several factors that could affect earnings. He said one of his first tasks when he was appointed a year ago was to redraft the optimistic sales projections on which the business plan had been placed.

The whole of Mitsubishi Motors Corporation was embroiled in a "revitalisation" plan and Mr McEniry said the prediction of a break-even result in Australia in 2006-07 had been an integral part of the group planning. "I have had to manage down the expectations of the people in Japan. It has been a very interesting time," he said.

Production targets for the 380 were initially set at 30,000 a year, but have steadily been reduced during 2006 to 27,000, then 15,000 and now to 12,000.

Despite the disappointing sales, the reorganisation of the plant had produced an unexpected bonus. "We are now working in teams and the quality index for the 380 is improving month-on-month with a consequent reduction in warranty claims," he said.

[Iconic Bionic]

Wish my car had the build quality of a Mitsubishi.

[Bain]

Wish my car had the build quality of a Mitsubishi.

←

Same. (I miss my old Magna VRX)

I know for certain what my next car wont be.. I love my car, but I dont want the problems associated with it in my next vehicle.

Good to hear Mitsu are still plugging along though.

Edited 28/11/06 10:08 PM by Bain