Mitsubishi Stock Down After Nikkei Report image

Mitsubishi fell to the lowest level in the past two years, after the Nikkei newspaper published a report according to which the company plans a capital reorganization to offset losses.

Mitsubishi’s stock dropped 11% to 162 yen, the steepest decline since March 2011. The benchmark Nikkei 225 Stock Average increased 1.6%. Mitsubishi executives will meet this week to discuss the reorganizing strategy, which includes increasing the company’s ability to issue new shares and to cut capital. The Tokyo Shimbun newspaper reported that the automaker plans to sell stock, relying on an anonymous source.

Mitsubishi managed to reach the record profit thanks to Japan’s green car subsidies, costs cuts and the yen’s fast depreciation. For the first quarter the automaker reported an operating profit of 26.5 billion yen, up 5.2% compared with the same period last year. For this financial year ending March 2014, Mitsubishi said it expect to reach an operating profit of 100 billion yen.

“It became clear that Mitsubishi had problems in each of the steps related to vehicle recalls,” Takahiro Ikari, an official at the transport ministry, told a Mitsubishi Motors executive. “The company should come up with plans for improvement, implement them and report them to the ministry.”

Source: Bloomberg