Japan's Mitsubishi Motors posts profit for past fiscal year

TOKYO - Mitsubishi Motors Corp. posted its first annual profit in three years despite lower sales, helped by cost-cutting as part of a turnaround plan with German partner DaimlerChrysler AG. <br> <br> Executives said the Japanese automaker still faced a challenge in repairing its battered corporate image. <br> <br> Mitsubishi Motors posted a net group profit of 11.3 billion yen ($89 million) on Monday for the fiscal year ended in March largely on cost reduction efforts with DaimlerChrysler, which owns 37.3 percent of Japan&#39;s No. 4 automaker. Mitsubishi Motors lost 278 billion yen the previous fiscal year. <br> <br> Sales for fiscal 2001 totaled 3.20 trillion yen ($25 billion), inching down 2 percent from 3.28 trillion yen a year ago. <br> <br> &#34;It&#39;s only a milestone in the three-year turnaround plan,&#34; said Rolf Eckrodt, the chief operating officer sent in by DaimlerChrysler. &#34;The domestic market remains our major challenge.&#34; <br> <br> Eckrodt, set to become chief executive next month, said his company was doing better than expected in some areas and was pinning hopes on a gradual recovery in sales, driven by growth in North America. <br> <br> Mitsubishi Motors sold 1.41 million vehicles in fiscal 2001, down from 1.44 million a year ago. Overseas sales held steady, but sales in Japan fell about 8 percent from 507,000 to 468,000. <br> <br> In Japan, the company&#39;s image was seriously battered by massive recalls that followed the summer of 2000, when it acknowledged a coverup of auto defects lasting more than two decades. <br> <br> Eckrodt refused to disclose details about model plans but said a compact version that will take advantage of design collaboration with the Daimler unit will go on sale in Japan in November. <br> <br> Mitsubishi Motors has been trying to strengthen quality control and accountability in the corporate ranks with help from DaimlerChrysler but has continued to stumble, taking a 3.9 billion yen ($31 million) charge for recalls in fiscal 2001 -- including paying for inspections of truck tires suspected of coming loose. Recalls cost the automaker 50.7 billion yen the previous year. <br> <br> Mitsubishi has been steadily reducing jobs, trimming about 12 percent of its global work force from 73,100 workers in 2000 to about 64,000. <br> <br> Mitsubishi Motors, which closed a car assembly line at a plant in Japan during the past year, took a 14.9 billion yen ($117 million) charge for early retirement expenses for nearly 1,400 people in fiscal 2001. <br> <br> The automaker also saved 137 billion yen ($1.1 billion) by cutting costs. It reduced debt to 1.3 trillion yen ($10 billion) from nearly 1.8 trillion yen in fiscal 1998. <br> <br> While acknowledging the battle was far from over, Mitsubishi Motors officials said they had hopes for the growing impact of the DaimlerChrysler alliance in new models. <br> <br> &#34;We believe we have taken our first step,&#34; Mitsubishi Motors president Takashi Sonobe told reporters. <br> <br> For fiscal 2002, Mitsubishi Motors is forecasting profit of 38 billion yen ($298 million) on sales of 3.4 trillion yen ($27 billion). <br> <br>