Japan's troubled Mitsubishi Motors on Monday reported a narrower net loss of 16.1 billion yen (US$137 million) for fiscal first-half, compared to the same period last year, helped by favourable foreign exchange rates and reduced costs.

In the same six-month period a year ago, the company lost 63.8 billion yen.

The automaker, fighting to regain consumer trust shattered by a recall scandal several years ago, also stuck with its forecast to return to profitability in the full fiscal year through March 2007 after three straight fiscal years of red ink.

Mitsubishi Motors Corp., Japan's fourth-largest automaker, did not break down figures for the July-September quarter, but in the fiscal first quarter it lost 15.1 billion yen, better than the 21.6 billion yen loss racked up the same period in the previous year.

Group sales grew 1.4 per cent to 1.005 trillion yen ($8.55 billion) in the first half from 991.26 billion yen in the same period last year.

Mitsubishi, however, said global retail sales volume fell by 60,000 units to 599,000 in April-September period, though sales volume in Japan grew by 6,000 to 114,000 units. Sales volume in North America was also up, rising 3,000 vehicles to 84,000 total units, the company said.

The Tokyo-based manufacturer _ which has booked three years straight of red ink _ kept unchanged its forecast to return to profitability for the full fiscal year ending March 2007, at an eight-billion-yen ($68.1-million) profit on 2.23 trillion yen ($19 billion) in sales.

The company, however, said on Monday that it would reduce its unit sales volume target down 86,000 vehicles to 1,322,000. The change reflects expectations of fewer sales in parts of Asia, while sales were expected to increase in North American and Europe.

Mitsubishi was aided by a weaker yen, which raises the value of overseas earnings when converted into yen, increased sales in Japan and North America, and various cost reductions, such as the absence of restructuring charges booked in 2005, the company said.

In 2000, Mitsubishi Motors admitted it had been covering up auto defects from authorities for more than two decades. The automaker announced a string of recalls but disclosed in 2004 it had failed to divulge all its problems in 2000 and had more concealed defects.

Mitsubishi Motors' sales had been sluggish even before the scandal, as it fell behind powerful domestic rivals like Toyota Motor Corp. and Honda Motor Co.

Mitsubishi had already suffered earlier scandals since the mid-1990s, including a sexual harassment lawsuit in the United States and arrests of executives on criminal charges in Japan for paying off racketeers tied to gangsters.