Japanese automaker Mitsubishi Motors Corp (MMC) said yesterday it faced a US$900 million claim for damages from its former distributor in Egypt, as it slashed its operating profit forecast.
Japan’s fourth-largest automaker said Cairo-based distributor Masria Co is claiming the money, alleging Mitsubishi was in breach of contract when it terminated its agreement with the company.
Masria said Mitsubishi’s “termination notice lacks reasonable grounds and demands an extension of the distribution contract,” with the claim representing 56 percent of the group’s net assets, the automaker said in a statement.
Mitsubishi said the complaint was “unfounded” because it gave Masria notice “six months prior to the expiration date of the distribution contract,” adding that it “will strenuously fight this lawsuit.”
It said that it did not expect the lawsuit to affect its business results.
Separately, the carmaker slashed its expected operating income for the year to last month by 54 percent to ¥13.8 billion (US$150.36 million), saying that earlier cost reduction estimates proved overly optimistic. Mitsubishi said it revised down the forecasts “due to factors such as a drop in sales volume as well as the company being unable to realize some of its planned cost reductions.”
It also lowered its net profit forecast to ¥4.7 billion from ¥5 billion and revenue to ¥1.44 trillion from ¥1.5 trillion.
For the nine months to December, Mitsubishi announced a net loss of ¥25.7 billion, hit by the economic downturn and a stronger yen.
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