Mitsubishi Motors Corp

Thank you for your participation in our first half of FY25 results meeting. While yours is busy today, I am Kendora Matsuoka, CFO of the company. While some uncertainty regarding U.S. tariff policies has dissipated and there are signs of easing environmental regulations, price competition may be driven by Chinese manufacturers has intensified further. Geopolitical and macroeconomic uncertainties such as supply concerns due to U.S.-China tensions and economic stagnation remain high. Under these circumstances, the sales environment surrounding us continues to be severe, compounded by rising costs and a delayed recovery in demand. Against this industry backdrop, a result for the first half, FY25, as shown in this slide, showed a decrease in both sales in profit on a year-on-year basis. Net sales were 1 trillion 261.3 billion yen, decreasing 4% YOY. Operating profit decreased 81% YOY to 17.3 billion yen. And the OP margin decreased 5.5 points from 6.9% in the same period last year to 1.4%. Ordinary profit was 15.8 billion yen. Net loss was 9.2 billion yen primarily due to temporary factors such as 7 billion yen evaluation loss in U.S. environmental credit following changes in U.S. environmental regulations and the 6 billion yen in losses associated with the withdrawal from a joint venture engine plant in China. Retail sales decreased 6% YOY to 384,000 units. Please turn to page four. In this slide, you can see the factors behind the YOY changes in operating profit for first half of Y25. In terms of volume mix, the impact of decrease of wholesale volume due to the discontinuation of some models in North America and other regions was offset by price in others, resulting in an overall increase of 1 billion yen in operating profit. Sales expenses decreased operating profit by 10.9 billion yen overall as an increase in incentive to address intensifying market competition was partially offset by a reduction in advertising expenses. Procurement costs and shipping costs resulted in a 1.2 billion yen decrease in operating profit, as the increase in material costs and factory expenses due to inflation and other factors are largely offset by procurement cost reduction activities and shipping cost improvement. Additionally, R&D expenses and other items each decreased slightly. Forex exchange had an unfavorable impact of 38.4 billion yen operating profit compared to the same period of the previous year due to a trend of yen appreciation against the U.S. dollar and yen depreciation against the Thai baht. Please turn to page 5. In this slide, you can see the factors behind the YOY changes in operating profit for second quarter FY25. Regarding volume mix enterprise and others, the impact of decreased volume due to additional tariffs in the U.S. and intensifying the market competition in some parts of ASEAN was partially absorbed by price improvement in other factors. However, this overall resulted in unfavorable year-on-year impact of 6.8 billion yen on operating profit. Sales expenses reduced operating profit by 1.9 billion yen overall, mainly due to an increase in incentive spending in Oceania, Europe, and Oceania, which was partially offset by a reduction in advertising and promotional expenses. Procurement and shipping costs increased by a total of 2.3 billion yen, as a negative impact of an increase in material costs mainly due to inflation was partially offset by procurement costs. partly due to the completion of new model development. Other items increased by a total of 5.4 billion yen due to expenses such as those for the environmental regulatory compliance. Impact from Forex exchange rates resulted in a 17.5 billion yen negative change to operating profit. Please turn to page six. It's about the decline of retail sales performance. Compared with the same period of the previous fiscal year, global retail sales decreased by 6%. This was primarily due to a decline in the retail sales volume in the region other than Japan, Latin America, and the Middle East and Africa. Please turn to page seven. First, I will explain the ASEAN-Alzheimer region. In the ASEAN region, automobile demand remains sluggish in Thailand and Indonesia. In contrast, the Philippines continues to experience solid demand. Amidst this market environment and intensifying sales competition in each country, we have largely maintained our market share through flexible responses. Moving into the second half of the fiscal year, we aim to expand our market share through the full-scale market expansion of new models among other initiatives. In Australia, the total demand for ultramodels slightly increased year on year. However, the market environment remained challenging as sales promotion driven by intensifying the sales competition and popping up demand. Most of sales volume in a market share decreased partly due to the impact of models whose sales have been discontinued. Going forward, we will focus on bolstering our sales volume through both the expanded sales of the new models, ESX, and strengthened collaboration with the fleet partners. Please turn to page eight. Next is Latin America, the Middle East, and Africa. In Latin America, although some markets are experiencing intensifying price competition, the recovery trend continues across the region, supported by robust domestic demand. In this environment, we're able to increase seals year over year, driven by the expanded seals of the new L200 Triton and the new Atlanta Sports X-Force.

We'll continue to roll out these new models to boost sales throughout Latin America.

In the Middle East, while total automobile demand and temporality plummeted due to the impact of a certain conflict, has generally remained robust. On the other hand, intensified competition has also impacted our sales. Going forward, we'll strengthen in cooperation with our distributors and partners in each country. We will position our brain pillars, the Outlander and L200 Triton at the core of our sales strategy and work towards achieving our targets. Please turn to page 9. Here is Japan, North America, and Europe. In Japan, total automotive demand was generally flat year over year. Despite the discontinuation of some models, our sales volume increased, primarily driven by strong sales momentum of delicate D5. Going forward, we will aim to further expand sales volume and market share by ensuring the successful launch of the updated Delica Mini. In the US, which accounts for the great majority of the North American region, automobile demand increased due to a surge in demand, which is fueled by the anticipated price increases from additional tariffs in a timing just before the discontinuation of the federal tax credit for electric vehicle purchases. On the other hand, our sales volume decreased primarily because the suppression of sales expenses in the first quarter as a response to additional tariff made it challenging to expand sales. The market environment is undergoing significant changes, including shifts in tax systems, environmental regulations, and the expiration of EV tax credit. We will accurately identify competitors' trends and a customer's needs and it promotes the achievement of our plan through flexible responses. In Europe, while automotive demand has saw a slight increase year over year, our sales volume decreased, why affected by intensified sales competition in key countries. Going forward, we will promote sales expansion of the new Outlander PHEV and focus on ensuring a successful launch of the upcoming new models. Next, Mr. Kato will explain the full year outlook for FY2025.