Earnings Call: Q4 2026

May 8, 2026

Good evening, everyone. Thank you for taking time out of your busy schedules to attend our financial results presentation today. First, I would like to briefly touch on the key points of our full year results for FY2025 and our outlook for FY2026. FY2025 was a year marked not only by heightened uncertainty, but also by more rapid and significant changes in the business environment than ever before. Even under these circumstances, we steadily executed various measures and, as a result, were able to secure a profit level in line with our revised plan. Operating profit was JPY 75.5 billion, and net income was JPY 10 billion. In terms of sales, signs of the effects of new model launches, including the all-new Destinator, have gradually begun to emerge in each market, and these results are beginning to be reflected in our business performance. We will explain these points in more detail later. Next, let me turn to our full year outlook. Based on assumptions that incorporate Middle East risk factors to a certain extent, we expect operating profit of JPY 90 billion, net income of JPY 25 billion, and an annual dividend of JPY 10 per share. Even amid an uncertain environment, including geopolitical risks, we will respond flexibly and swiftly to changes in circumstances by accelerating our evolution toward a more resilient management foundation. In terms of sales, in addition to the full year contribution from models launched in the second half of FY2025, we will steadily build up sales volume through further expansion of destination markets. At the same time, looking ahead to FY2026, we plan to launch an all-new cross-country SUV that will play a key role in our next phase of growth, and we will further strengthen our product competitiveness. Please turn to page 5. On this slide, I will explain our financial highlights for FY2025. The business environment surrounding the company in FY2025 was marked by a series of major changes, including the impact of the U.S. tariffs, the rise of Chinese manufacturers, and changes in environmental regulations in various countries, making it a year in which we faced considerable challenges in responding to them. Since entering 2026, geopolitical risks have materialized, including the situation in Venezuela and the deterioration of the situation in the Middle East, and uncertainty has increased even further. Under these circumstances, although profit decreased year-on-year, sales of new models, including the all-new Destinator, have steadily begun to take hold, and our profitability has been improving recently. As a result, we were able to secure a profit level in line with our revised plan. Net sales came to JPY 2,896.5 billion, an increase of 4% year-on-year. Operating profit was JPY 75.5 billion, a decrease of 46% year-on-year, and operating margin was 2.6%. Ordinary profit was JPY 78.9 billion, and net income came to JPY 10 billion. Accordingly, as we were able to secure net income in line with our revised plan for FY 2025, we have decided to pay a year-end dividend of JPY 5 per share and an annual dividend of JPY 10 per share as announced. Retail sales volume was 797,000 units, a decrease of 5% year-on-year. Please turn to page 6. This slide explains the factors behind the year-on-year change in operating profit for FY 2025. Regarding volume mix, although there was a negative impact from a decline in wholesale volumes due to the discontinuation of sales of certain models in North America, Australia, and some other markets, the impact was offset by an improvement in model mix and higher selling prices. As a result, volume mix contributed JPY 37.6 billion to operating profit. Sales expenses had negative impact of JPY 29.7 billion. Although there were impacts such as increased incentive spending in response to the intensified competitive market environment, we were able to absorb part of these impacts by curbing advertising expenses. Procurement costs and shipping costs had a negative impact of JPY 5.3 billion. Although the increase in material cost was significant due to higher costs associated with product enhancement and the impact of inflation, we were able to absorb part of this impact through procurement cost reduction activities. R&D expenses and other expenses each improved year-on-year. As for foreign exchange, compared with the previous year, the yen appreciated against the US dollar while depreciating against the Thai baht. As a result, foreign exchange had a negative impact of JPY 37.4 billion. In addition, U.S. tariff payments had a negative impact of JPY 47.4 billion, as shown on the slide. Please turn to page 7. This slide explains the factors behind the year-on-year change in operating profit for the fourth quarter of FY 2025. Volume mix and price, et cetera, delivered a positive impact of JPY 26.1 billion year-on-year. This was driven by an increase in sales volume, mainly of new models, as well as continued price improvement. Sales expenses had a negative impact of JPY 14.3 billion. Although sales expenses were affected by increased incentive spending in North America, Oceania, Europe, ASEAN, and some other regions, we were able to partially offset this by curbing advertising expenses. Procurement costs and shipping costs had a negative impact of JPY 5.1 billion. Although material cost deteriorated due to higher cost associated with product enhancements and the impact of inflation, we were able to partially offset this through cost reduction activities. R&D expenses improved by JPY 4.7 billion, partly reflecting the completion of development of new models. Other items improved by JPY 9.7 billion, due mainly to factors related to environmental regulatory compliance costs and after-sales part. At foreign exchange, although the Australian dollar, the euro, and some other currencies strengthened against the yen, the appreciation of the Thai baht, which is cost currency, resulted in a significantly slightly negative impact overall. In addition, U.S. tariff payments had a negative impact of JPY 10.1 billion in the fourth quarter. Please turn to page 8. Now I will explain our retail sales volume results. Overall, although sales volume increased in some regions supported by strong sales of new models, retail sales came to a sudden halt in March due in part to the deteriorating situation in Iran, which began in March. As a result, retail sales volume decreased by 5% year-on-year to 797,000 units. By region, sales volume decreased in North America due to the impact of Tariffs as well as the discontinuation of sales of certain models. In Australia, sales volume also decreased due to the discontinuation of sales of multiple models as well as a strong push by Chinese manufacturers. In the Middle East and Latin America, retail sales volume increased year-on-year. This was supported by strong sales of new models in Latin America as well as core models in the Middle East, which drove sales throughout the year. The Middle East was affected by the situation toward the end of the fiscal year. In Japan, sales volume increased due to steady sale in new models. Both market share and sales volume increased for the 5th consecutive years. Now I will explain the hot topics for our FY2025 financial results. First, please take a look at the trend in retail sales volume by model. Overall, retail sales volume decreased year-on-year due in part to the discontinuation of sales of certain models and the situation in Iran. On the other hand, sales of new models, including the all-new Destinator, have been steadily increasing. In broad terms, the decline in sales volume of the lower margin Mirage se-series, together with the increase in sales volume of the higher margin Destinator and XFORCE, led to an improvement in model mix and higher profit per unit, resulting in improved profitability. Please turn to page 10. Next, I will explain the ASEAN, our core region. In FY 2025, retail sales volume in the ASEAN region as a whole decreased significantly in the first half due to weak market condition and the challenging sales environment. However, in the second half, we were able to shift to volume growth. Our market share was also steadily maintained and expanded, particularly in the second half. According to our research, our share ranking among all brands, including Chinese manufacturers in the five major ASEAN countries, rose significantly from third place in the previous fiscal year to second place. Even under an extremely challenging competitive environment by offering products unique to Mitsubishi Motors and products and services that match customer needs, we were able to secure a certain level of volume share and also achieve earnings growth. As a result, we have gained confidence in our continued growth in ASEAN. Next, Keisuke Kishiura will explain our FY 2026 outlook and key initiatives to achieve it. Keisuke Kishiura-san, please. Please turn to page 12. Thank you very much, Kato-san. Now, this is Keisuke Kishiura speaking, and I would like to present our FY 2026 outlook and other topics. In addition to the uncertainty surrounding the outlook for the situation in the Middle East, due to risks in material procurement, increases in raw material and logistics cost, and the impact of prolonged inflation on demand, the business environment is expected to remain challenging. Even under these circumstances, in addition to the full year contribution of the new models launched, one after another in the second half of FY 2025, we will steadily move forward with the expansion of export markets and the launch of additional new models. At the same time, by continuing to implement cost reduction measures in an agile way and improve our earnings structure, even under such an external environment, we aim to achieve increases in both revenue and profit as shown on the slide. As for the dividend, at the beginning of the fiscal year, we plan to pay JPY 10 per share. In light of the uncertainty in the business environment, we are obliged to maintain a cautious stance at the moment. However, under any circumstances, we aim to maintain an annual dividend of at least JPY 10. Then we will use the cash generated to enhance corporate value over the mid to the long term, and while considering the balance between strategic investments that will lead to future growth and shareholders' returns. Please turn to page 13. This slide explains the factors behind the year-over-year change in our operating profit forecast. Volume mix and price are expected to contribute a positive impact of JPY 59.8 billion in total, reflecting an increase in sales volume driven by new models and continued price improvement. About sales expenses, although we will have discipline in incentive spending in light of the competitive environment and market conditions, we will also expect an increase in advertisement expenses to support the launch of new models. We expect a negative impact of JPY 6.8 billion year-over-year in sales expenses. In procurement cost, shipping cost, through cost reduction activities, we will partially offset the increase in material cost, mainly derived from inflation and product enhancements. However, we expect a negative impact of JPY 28.7 billion year-on-year. R&D expenses are expected to remain largely on par with the previous fiscal year. In addition, mainly due to environmental, regulatory compliance cost and Forex impact on suppliers, procurement, other expenses are expected to have a negative impact of JPY 9.6 billion year-on-year. Foreign exchange is expected to contribute positively overall, reflecting the generally weaker yen. However, we have factored in the negative impact on earnings from the appreciation of the Thai baht, which is our cost currency. As for the impact of the Middle East situation, at this point, we assume that the impact of the conflict will remain until the end of July. Based on the assumption, we are expecting a negative impact of about JPY 30 billion. Going forward, we continue to monitor closely the developments in the conflict and review the impact appropriately. Please turn to page 14. Next, I will explain our retail sales volume forecast for FY2026. In retail sales volume, we aim to increase volume in each region this fiscal year. In ASEAN, particularly in the Philippines and Vietnam, we will steadily capture the full year contribution of new models, including the Destinator and boost sales. In Japan, we aim to expand sales volume by further strengthening sales of the Delica series by leveraging the Delica Mini and the Delica D:5. I will talk more about the specific initiatives in the strategy section later. Please turn to page 16. Following the launch of new models in the second half of the previous fiscal year, we have begun to see signs of improvement in model mix. As shown on this slide, the share of ASEAN strategic models has been steadily increasing recently. In this fiscal year, based on this improvement in model mix and through the full year contribution of new models such as Destinator, the expansion of export markets for ASEAN models and further enhancement of the product competitiveness of existing models, we will transform the model mix in a full-fledged manner. In that process, we will shift our sales mix towards new models and higher year-end models and increasing profit per unit. We aim to build a business structure that can steadily generate profit without relying excessively on volume growth. Please turn to page 17. Now I would like to present our key initiatives in our major regions. First, ASEAN and Oceania. The rise of Chinese manufacturers and their aggressive pricing strategies continue to make the environment competitive and challenging. Under the climate in ASEAN, in addition to the full year contribution of the new models launched last fiscal year, we will strengthen our presence through expanding the rollout of HEV models into markets outside Thailand and launching new models. In Oceania, we will expand our lineup through the launch of new models and work to enhance our brand value. Next, in Latin America, in addition to expanding sales by leveraging the L200 and Triton, we will move ahead with the full scale rollout of the all-new Destinator. In the Middle East and Africa, we will establish our brand centered on SUVs, while also proceed with the sequential rollout of the Destinator. Next, Japan, North America and Europe. In Japan, we will maintain and enhance the sales momentum of the strong performing Delica series while making thorough preparations to ensure the successful launch of new models in the future. In North America, we will work to strengthen dealer retail sales through the introduction of variants tailored to customer needs. In Europe, we will strengthen sales with a focus on our core models. Please turn to page 18. About the full year contribution of new models. In this fiscal year, the full year contribution of the new models launched last fiscal year is also expected to support both volume and earnings. The all-new Destinator was launched last fiscal year in Indonesia, Vietnam and the Philippines and has been highly regarded in each market. In this fiscal year, we will roll it out to additional markets in stages. As for the new Xpander, we are currently offering the HEV model in Thailand and plan to expand it to markets outside Thailand during this fiscal year. In addition, the refreshed Delica series has already earned high praise, by maintaining and enhancing its sales momentum, we will further strengthen the brand power of the series as a whole. Through these initiatives, we will shift our growth drivers from volume expansion to value creation and establish an earnings structure that is not overly dependent on volume growth, thereby steadily achieving the outlook presented today. This concludes our presentation. Beginning with the tariff measures at the start of the year, FY 2025 was a year in which the external environment has been extremely unstable and subject to rapid changes. We recognize that it was a difficult year, one in which we have been forced to adapt to changing circumstances time and again. As we enter into FY 2026, we have seen a series of events with the potential to significantly impact the global economy, such as escalating geopolitical risks and the recent sudden changes in the situation in the Middle East and have occurred in a quick succession, and the outlook for the future remains uncertain. Even under such uncertain conditions, we have seen steady progress, including a recovery in sales from the second half, driven by the efforts of new models in ASEAN, as well as growth in both sales and volume share in Japan. Building on those developments, we will maximize the effects of new models in regions with upward momentum and expand both sales volume and net sales in FY2026. At the same time, we will continue to closely monitor developments in geopolitical risks, including the situation in the Middle East, and respond flexibly and swiftly to changes in the business environment. Thank you very much for your kind attention.