Mitsubishi Motors Corp

Thank you very much for taking time out of your busy schedule to attend our first half earnings call. In addition to an increase in vehicle supply across the industry, intensifying competition, the delay in recovery of the macro economies mainly in Thailand and Indonesia have slowed down the demand for automobile. As a result, the sales environment surrounding us remains to be severe. As shown in this slide, our results for first half FY 2024 showed a decrease in both sales and profit on a year-on-year basis. The net sales were 1,307,400,000,000 yen, a drop by 2% year-on-year. The operating profit decreased 13% year-on-year to 90.7 billion yen, and the OP margin dropped 0.9 point year-on-year to 6.9%. The ordinary profit decreased 43% year-on-year to 69.2 billion yen, mainly due to the impact of Forex losses, and the net income after tax was 38 billion yen. The retail sales increased 5% year-on-year to 408,000 units.

Please turn to page 4. In this slide,

you can see the factors behind the year-on-year changes in operating profit for first half of 2024. In terms of volume mix and price, despite an increase in shipment to Japan, North America, and Australia, New Zealand, and other markets, shipments to Europe and the Middle East were controlled according to the plan, and inventory adjustment in ASEAN were accelerated. As a result, the operating profit decreased by ¥7.9 billion. Sales expenses pushed down the operating profit by ¥27.7 billion, mainly due to higher incentives in the U.S. and Thailand for intensified market conditions. Procurement cost shipping costs improved by ¥10.4 billion in total, despite an increase in material costs due to inflation and increase in plant expenses. and deterioration in transport costs from higher unit price of transportation as well as special vessel arrangements. Activities to reduce material cost offset those negative factors. R&D expenses increased as planned and that reduced the operating profit by 8.5 billion yen. Other items mainly an increase in general expenses such as higher personnel expenses and the impact of inflation and an increase in quality costs deteriorated the OP by 12.5 billion yen. Regarding Forex, the negative impact of the cost currency Thai baht was offset by U.S. dollars and Australian dollars and improved the OP by 32.7 billion yen. Please turn to page 5. In this slide, you can see the factors behind the EON-E changes in operating profits for the Q2 FI 2024. In terms of volume mix and price, In addition to ASEAN's turnaround in profit thanks to contributions from Vietnam and the Philippines, an increase in shipments to Japan and North America and improved mix due to an expansion of new model shipments resulted in improving DLP by 4.1 billion yen. Sales expenses reduced the operating profit by 18.3 billion yen, mainly due to an increase in incentives in the U.S. for the intensified market competition. Procurement cost shipping costs improved by 8.4 billion yen in total as material cost hiked due to inflation. Factory expenses and increased transportation costs were absorbed by favorable changes in raw material prices and activities to reduce procurement costs. R&D expenses increased as planned, bringing down the operating profit by 4.3 billion yen. Other items deteriorated by 1.8 billion yen. due to an increase in personnel expenses and an increase in general expenses due to inflation and an increase in quality costs. Regarding Forex, the negative impact from the cost currency Thai baht was reversed by the US and Australian dollars and improved the operating profit by 8.1 billion yen. Please turn to page six. I would like to explain our global sales volume for first half of 2024 compared with the previous fiscal year. all regions showed an upward trend. Globally, the retail sales increased by 5%. The significant decrease in sales in China and others was due to the impact of structural reforms implemented in FY 2023. Next, I will explain the situation by region. Please turn to page 7. First, I will explain the ASEAN and Oceania regions. In the Philippines, with the robust automobile demands, we maintain the strong sales momentum. of existing models and both our sales volume and market share grew significantly. We aim to further increase our sales volume and market share by focusing on new models such as Exforce and Triton, which have gradually penetrated into the market since the launch. In Vietnam, where automobile demand is recovering, our sales volume and market share both grew significantly. Going forward, we will expand our sales volume and market share by leveraging the new Triton, which will be launched shortly. In Thailand, the tightening of credit for automobile loans continues and demand for automobiles continues to decline, particularly in the pickup segment. We expanded our market share by accelerating inventory optimization and focusing on expander, which is performing well. To prepare for the recovery of demand, we will continue optimizing inventories and firmly maintain measures to expand our market share. Indonesia is also in a severe situation where the total demand has fallen year-on-year for 16 consecutive months since June 2023. Under such environment, our market share is on the increasing trend thanks to solid sales of the new Pajero Sport and Triton. Going forward, we aim to further expand our market share by expanding the sales of new X-Force, which is gradually increasing sales after its launch. In Australia, which accounts for the great majority of the Oceania region, the total demand for automobiles remained almost unchanged from the previous year, despite concerns about the decline in consumer sentiment due to the economic downturn. We increased our vehicle supply year-on-year and increased both sales volume and market share. Please turn to page 8. Next is Latin America and the Middle East and Africa. In Latin America, Brazil is showing a strong recovery. A full-fledged recovery of the economy and a gradual reduction of the policy interest rate have increased the total automobile demand by 15% EOE. Other major economies are also showing a moderate recovery. but that has not led to a full-fledged recovery of the total automobile demand. Under such environment, we managed to increase sales year-on-year, leveraging the launch of the new L200 Triton and the new Outlander Sport X-Force. We will continue to launch these new models to boost sales throughout Latin America. In the Middle East, We were slightly affected by the Israeli-Gaza conflict that began last fall and restrictions on the Red Sea route due to ship attacks off the coast of Yemen. Going forward, we will focus on sales of new L-200 Triton launched in first half FY2024 and new Outlander Sport X-Force and enhance our brand. Please turn to page 9.