Mitsubishi dives as US sales slow

MOST of

Mitsubishi Motors, the country's fourthlargest player which is 37% held by German-US player DaimlerChrysler, is not one of them, however.

Its shares crashed 40 yen, or 13.9%, today to 248 yen as investors reacted with predictable horror to a nasty trading update that came late yesterday.

For the full year, the company now expects a net profit of 10bn yen (£52m), just a quarter of the figure that it outlined a couple of months ago.

The revised figures for the half-year to September were more grisly. Mitsubishi Motors sees red ink of 80bn yen, turning on its head an earlier suggestion of profits of 10bn yen in the period.

There are several problems. First it booked a one-off charge of 50bn yen against expected loan defaults. Customers who have been lured into US showrooms with promises of cheap finance, some interest free were taking the cars but failing on the repayments.

Second, despite the aggressive tactics, its US sales have been sluggish. Mitsubishi Motors, which claims less than 2% of the market, now sees shifting 340,000 units this year, down almost 10% from the earlier forecast of 370,000.

Brokers said the poor picture underlined the intense competition in the US, where domestic carmakers and some foreign rivals have been forced to roll out costly buyers' incentives to keep the showrooms busy.

Data from tracking group Autodata showed Ford was offering incentives of $3400 (£2103) a car, while at General Motors it was close to $4000. Asian manufacturers offered an average-1300. Consumer electronics giant Sony was a touch weaker after lifting the veil on first-quarter numbers when the market closed yesterday.

Its shares eased 90 yen, or 2.4%, to 3670 yen as net profit in the three months to June crashed 98%. The grim picture was largely priced in already, brokers said.

The Nikkei 225 traded off 22.99 points to 9648.01, down 0.24%. NEC Electronics, which soared on its debut yesterday, made further gains, adding 190 yen, or 3.5%, to 5620 yen. Hong Kong shares were weaker, including ports-to-telecoms conglomerate Hutchison Whampoa, despite being in line for a share of a one-off dividend from Canadian oil firm Husky. Hutch, controlled by billionaire Li Ka-shing, owns 35% of Husky and received C$161m (£71.4m). It dipped 10 cents, or 0.2%, to HK$49.90.

Pacific Century Cyberworks, the fixed line telco controlled by Li's son Richard Li, picked up by five cents, or 1.1%, to HK$4.38. Richard Li today handed the corporate reins to new deputy chairman and group managing director Jack So.

The Hang Seng fell 4.86 points to 9928 on a lack of positive leads and lacklustre presummer trade. Market heavyweight HSBC was ahead 25 cents, or 0.3%, at HK$94.

In Australia, lender Australia New Zealand Bank said it had ditched talks with Thai Military Bank aimed at taking a stake. ANZ rose six cents, or 0.3%, to A$18.06, while TMB fell 4% to 5.35 baht.

The All Ordinaries added 8.3 points, or 0.27%, to 3081.3.