Mitsubishi narrows loss on weak yen

TOKYO - Mitsubishi Motors, bailed out by shareholders twice since May 2004, posted a narrower loss in its second quarter as a weaker yen increased earnings from overseas sales of the new Outlander sports-utility vehicle.

Net loss narrowed to 42.15 billion ($519 million) in the three months ended September 30 from last year's 124.1 billion, based on Bloomberg's calculation of the carmaker's first-half results. Sales fell 1.5 per cent to 505.5 billion.

The yen has fallen more than 10 per cent against the US dollar this year, making Outlanders more profitable to sell abroad.

The nation's fifth-largest carmaker forecast global vehicle sales to rise for the first year in three on demand for Colt compact cars and eK minicars, helping president Osamu Masuko end a nine-quarter run of losses.

"Mitsubishi Motors' performance is improving after their reorganisation plan, which helped it cut costs and release new models," said Koji Endo, an analyst at Credit Suisse First Boston in Tokyo, who rates the shares "underperform". "We expect the automaker to post an annual profit in the year starting April 2006."

"Mitsubishi Motors may be bottoming out little by little," said Hitoshi Yamamoto, president of Commerz International Capital Management (Japan). "Mitsubishi Motors needs to release unique models instead of trying to compete with rivals on the same designs," he said.

- BLOOMBERG