Mazda's Profit Drops 62%
August 3, 2007
The Mazda Motor Corp. reported last Tuesday a 62 percent drop in their April to June profit. But the Japanese automaker said that the latest numbers were within expectations, with the drop resulting mainly from foreign-exchange related accounting expenses and greater research investment, reported the Associated Press.
The profit of Japan’s fourth largest automaker slipped to 2.48 billion yen or $20.9 million for the three months ended June 30, down from 6.61 billion yen of the previous year. A weak yen usually is advantageous to Japanese exporters like Mazda but this time it resulted in some losses due to forward foreign exchange contracts, the company said.
Mazda, 33.4 percent owned by the Ford Motor Co., said that its quarterly increased by 11 percent on-year to 814.29 billion yen. The Hiroshima-based automaker predicts fiscal year sales to edge up two percent to 3.320 trillion yen. Global vehicle sales are expected to climb four percent to 1.35 million vehicles for the fiscal year ending March 2008, up from about 1.30 million the previous fiscal year, it said in a statement.
"Going forward, we are aiming to steady growth," said Mazda representative director David Friedman. He said that the rollout of the Mazda2 in Japan was going well, and other cars were in the works for other regions for later this year.
Mazda, the maker of Miata convertible and RX-8 sports, said that it is headed for its fourth straight year of record earnings for the fiscal year ending March 2008, with 85 billion yen in profit, up 15 percent from fiscal 2006.
To fortify its edge in North America, the maker of the Mazda Protege radiator has been ramping up domestic production capacity, strengthening its lineup, developing technology and taking more control of its dealer networks.
The Japanese automaker has been restructuring since fiscal 2001, when great losses resulted in the slashing of its work force in Japan. For the latest quarter, retail sales volumes were up in North America on-year, especially in Canada and Mexico, totaling 108,000 vehicles, up six percent from the same period in 2006. But sales slipped in Japan, where the auto market has been sluggish for years, declining seven percent to 57,000 vehicles, the company said.
Demand was strong for the CX-7 sport utility vehicle, BT-50 truck and the Mazda3 compact in other global markets, according to Mazda. But the North American division of the automaker said that July sales fell slightly as CX-7 sales partially offset losses across most other vehicle models. The company said that the total July sales dropped by 0.4 percent to 25,853 vehicles from the 25,963 units in the year-ago period. Adjusted to reflect one fewer selling day in 2007, sales increased 3.7 percent.
Mazda’s car sales fell 7.9 percent to 18,036 in July, compared with 19,585 cars sold in the year-ago period. Truck sales, on the other hand, increased by 22.6 percent during the same period to 7,817 vehicles, compared with 6,378 vehicles sold in July of last year.
The Mazda3’s sales rose by 27.2 percent to 11,567 vehicles sold during the month, compared with 9,096 vehicles in July 2006. The CX-7’s sales rose by 81.7 percent in July to 3,868 vehicles, up from 2,129 sold in July of the previous year.
Car sales rose 1.3 percent so far this year, and truck sales are up 22.6 percent in the same period. Mazda, meanwhile, has said that it would rein in production during the first half to Sept. 30 to adjust the high levels of inventory in the U.S. market.
"Inventory adjustment (in North America) is progressing and we will be able to complete the programme by the end of the first half," Mazda Chief Financial Officer David Friedman said in a press conference.
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