Japanese automaker Mitsubishi Motors Corp (MMC) said on Monday it faced a 900 million dollar 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 added that it did not expect the lawsuit to affect its business results.
Separately, the carmaker slashed its expected operating income for the year to March by 54 percent to 13.8 billion yen (150.36 million dollars), 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 realise some of its planned cost reductions”.
It also lowered its net profit forecast to 4.7 billion yen from five billion and revenue to 1.44 trillion yen to 1.5 trillion.
For the nine months to December, Mitsubishi announced a net loss of 25.7 billion yen, hit by the economic downturn and a stronger yen.
Mitsubishi Motors will publish its final annual results on April 27. In 2008-2009, it had suffered a net loss of 54.88 billion yen.
