Mazda lifts H1, full-year net profit forecasts
Reuters / October 31, 2002
TOKYO -- Mazda Motor Corp., Japan's fifth-largest automaker, on Thursday raised its net profit estimates for the first half and the full year to next March, citing cost cuts, tax benefits and a weaker yen.
The automaker, one-third owned by Ford Motor Co., now expects group net profit for the six months to September 30 to be 5.5 billion yen ($44.74 million), compared with a May forecast of two billion yen.
It expects an operating profit of 14.6 billion yen, up 3.6 billion yen from the previous estimate.
"We had better results than we initially projected and that's a function of working closely with our suppliers to reduce material costs," Gideon Wolthers, managing executive officer, told a news conference in Tokyo.
Due to the rosier first-half estimates, Mazda also lifted its group net profit forecast for the full year to 26.5 billion yen from 20 billion yen.
Also driving the better forecasts was an expected seven percent rise in full-year vehicle sales worldwide, to 1.015 million units from the previous estimate of 1.001 million units.
"With new products such as the Atenza/Mazda6 and new Demio now reaching the markets, we are firmly on course," Mazda President Lewis Booth told a news conference in Hiroshima.
Full-year revenues are now expected to rise 11.7 percent to 2.34 trillion yen, up from the earlier forecast of 2.25 trillion yen.
While analysts said the new first-half outlooks were positive, they reserved optimism for the full year, citing the dip in the operating profit forecast to 50 billion yen from 51 billion yen. The new figure would still represent a rise of 75 percent from last year.
"It's good news for the first half, but the new full-year figures are nothing to get excited about," said Tatsuo Yoshida, auto analyst at Deutsche Securities.
"There is no improvement on the operating level, which probably means fundamentals are not getting better," he added.
Just after the announcement, Mazda's shares jumped 6.8 percent, but by the end of trade, they dropped back to 274 yen, up three percent.
The shares still outperformed those of Mazda's main rivals, including top-ranked Toyota Motor Corp., which gained 0.85 percent after announcing rosy half-year earnings and full-year forecasts on Wednesday.
Mazda is due to announce first-half results on November 12.
The revisions came after rivals Toyota, Honda Motor Co. Ltd. and Nissan Motor Co. Ltd. all unveiled record-setting first-half earnings results this month on strong performances in North America.
Mazda said although it was selling more cars in the United States than it originally expected, increased volumes were not translating into higher revenues because its sales incentives had risen by $400-$500 from last year to over $2,000 per vehicle.
"We are achieving sustainable, profitable growth, although we are seeing increased pressure on our net revenue," Booth said. "Looking ahead, we must continue to achieve our cost reduction targets as we did in the first half."
And at home, Mazda lowered its sales outlook for the year to March to 300,000 vehicles from 319,000. Booth said sales of the Demio subcompact, launched in August, were slightly below the automaker's high expectations.
But Mazda said it would strengthen its domestic dealership network by consolidating 34 dealers across Japan into 11, a move it said would help reduce inventories and boost efficiency.
The automaker also said it expects group interest-bearing debt to total 672.7 billion yen in March 2003, or 38.1 billion more than originally forecast.
After spending much of the 1990s in the red, Mazda returned to profit last year with the help of Ford, and is hoping a new brand identity will lead it on a path of product-led growth.
My first car was a 67 Mustang Coupe, 2nd one was a 67 Cougar XR-7, 3rd one was a 66 Mustang Coupe. Why did I get rid of these cars for ? I know why, because I'm stupid, stupid, stupid.
My next Ford.....