MITSUBISHI MOTORS CORPORATION (OTCMKTS: MMTOF) released its first-quarter earnings call on July 27, 2021. The company has an 88% increase in net sales for Q1-2021 when compared with the previous year. As a result, the net sales of Mitsubishi came in at ¥431.9 billion. The company is attributing its financial improvement on a YoY basis to introducing a new OUTLANDER in the region of North America. Additionally, there has been a range of structural reforms since the previous year.
The financial report
The company’s operating profit is reported at ¥10.6 billion, showing significant improvement, thanks to the unit sales increase. This increase in unit sales is attributed to country and product mix improvement, apart from the effects of newer vehicles and curbing sales expenses. Mitsubishi has also implemented significant cost reductions. All these factors have led to an improvement in operating profit to 2.5%. The volume of global retail sales is 230,000 units, a jump of 65% from the previous year. This is the first-time reported operating profit of the company since Q4-FY2019.
Cost reduction leading to better Q1-2021
The company’s net income has totaled ¥6.1 billion, resulting out of paid income tax. The ordinary profit has come in at ¥11.2 billion. There have been significant cost reductions, which mainly include advertising expenses, incentives, and materials costs. Additionally, the company has also cut cost in R&D expenses by ¥3.6 billion. However, the R&D cost is likely to increase when a company introduces its new products. As a result, Mitsubishi is expecting a ¥6.2 billion rise in this expense down the line.
As the recovery trend from pandemic emerged in certain regions, such as Indonesia and ASEAN, there has been a considerable increase in unit sales. The total sales surged 65% on a YoY basis, and the company sold 230,000 units. In the core market, i.e., ASEAN, the sales have skyrocketed 142% on a YoY basis. The units sold totaled 58,000.