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Mazda posts huge loss

Ups and downs: Mazda posted a loss in the last Japanese financial year after making a profit in the previous year.

$1.3 billion loss for Mazda, but Honda remains in profit and projects big increase

30 Apr 2012

MAZDA posted a 108 billion yen ($A1.29 billion) net loss for the Japanese financial year – its worst result in more than a decade – while Honda managed to remain in profit despite being more harshly affected by the Asian natural disasters.

Honda, Japan’s third-largest car-maker, recorded a net profit of 211.4 billion yen ($A2.5 billion) in the past year – down 60.4 per cent on the previous financial year – after losing a large slice of its global production capacity in the Thai floods last year.

Mitsubishi Motors, Japan’s number four, increased net profit, by 53.2 per cent to 23.9 billion yen ($A285m), saying that was made possible because of cost-cutting measures.

Japan’s third, fourth and fifth-largest car-makers announced their profit results for the year ended March 31 late last week, while number one Toyota and second-ranked Nissan are scheduled to post their results next week.

Mazda Motor Corporation’s big loss represents a big reversal as it made a net profit of 60 billion yen ($A716 million) in the 2011 financial year.

Mazda has taken a greater hammering from the strength of the yen as it depends so strongly on production in Japan, exporting 77 per cent of domestic production, while its rivals have shifted more production off-shore.

The formerly Ford-controlled company has been forced to issue $1.8 billion worth of new shares to private investors and sell some assets.

In a statement issued with the financial result on Friday, Mazda announced it would sell more than half of the shares in its subsidiary Toyo Advanced Technologies, which produces machine tools and car components, mainly automatic transmission oil pumps. The shares will be sold to Itochu Corporation, a Fortune 500 company with which Mazda has worked on development of electric cars.

Mazda said it would also sell four company property sites to Sumitomo Mitsui Finance in June and then lease them back, raising vital cash but adding to the company’s operating costs.

 center imageFrom top: Honda CEO Takanobu Ito and executive vice-president Tetsuo Iwamura.

Under its “Structural Reform Plan”, Mazda expects to rebound quickly this year, forecasting a net profit for FY2013 of 10 billion yen ($A119 million) on the back of a 7.5 per cent increase in global sales.

Honda Motor Co, which was hit hard by the Thai floods on top of set-backs from the Japanese earthquake and tsunami a year ago, limited the damage to its bottom line by lifting profit 62 per cent in the last quarter, ending a run of five consecutive quarters of year-on-year decline.

Honda expects to rebound fully in the current financial year and has forecast it will more than double its net profit to 470 billion yen ($A5.6 billion) in FY2013, with growth in all three of its business divisions – cars, motorcycles and power products.

It bases its projections on surging Asian sales and a recovery in the United States, its biggest and most profitable market, where sales of the latest CR-V compact SUV have jumped by more than a quarter so far this year.

Honda executive vice-president Tetsuo Iwamura told a news conference that Honda now expected the overall US market to grow to 14.3 million vehicles this year, up from a forecast of 13.5 million made at the end of last year, and Honda aimed to recover a market share of more than 10 per cent as soon possible.

Mr Iwamura said Honda expected to grow faster than the overall market.

“The North American market is slowly recovering, while we’re entering new segments in Asia,” he said.

Honda forecast its global car sales would jump 38.4 per cent to 4.3 million vehicles, with North America rising 31.5 per cent to 1.74 million vehicles, Japan climbing 20.7 per cent to 710,000 and the rest of Asia 56.5 per cent to 1.31 million.

Honda CEO Takanobu Ito conceded that the company he took over in mid-2009 might have let down its guard during the previous decade of rapid expansion, while pulling back on vehicle development too much after the global financial crisis.

Mitsubishi’s latest results are the reverse of Honda’s, with net profit down in the last quarter (by 42.0 per cent) but up (by 53.2 per cent) for the full year.

MMC said on Thursday that the increased FY2012 profit was due mainly to “improvements in model mix, together with other measures such as reductions in materials and other costs” while the last quarter decline was down to the strong yen.

Nevertheless, it projected a higher – though only 4.6 per cent – full-year profit of 25 billion yen ($A298 million) for the new financial year.

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