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Mazda sees 16% profit fall, seeks growth in S.Amer

Mazda sees 16% profit fall, seeks growth in S.Amer
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First Published: Fri, Jun 17 2011. 01 59 PM IST
Updated: Fri, Jun 17 2011. 01 59 PM IST
Tokyo: Mazda Motor Corp forecast on Friday a 16% fall in operating profit this year as it takes a hit from a stronger yen and supply chain disruptions after the March 11 earthquake.
The operating profit forecast of ¥20 billion ($248 million) for the year to 31 March, 2012 was better than the average ¥5.66 billion projection in a survey of 21 analysts by Thomson Reuters I/B/E/S.
Mazda forecast a net profit of ¥1 billion, swinging from a ¥60 billion loss last year.
To seek growth in emerging markets, the Japanese automaker also announced on Friday plans to build a new factory in Mexico, confirming a Reuters report a day earlier.
Mazda said it would build a $500 million factory in the central Mexican state of Guanajuato with trading company Sumitomo Corp, beginning production in the business year starting in April 2013 and mainly to serve Central and South America.
Mazda will build the Mazda2 subcompact and Mazda3 compact cars, as well as engines, at the new site. The factory will have an output capacity of 140,000 vehicles a year and employ about 3,000 at maximum capacity, it said.
Mazda will own 70% of the joint venture plant, while Sumitomo will hold 30%.
The partners will also set up a sales company in the fast-growing Brazilian market, beginning operations in the business year starting in April 2012, initially selling cars made in Japan and eventually adding vehicles built at the new Mexico plant.
“These initiatives are part of Mazda’s plans to achieve its mid- to long-term goals for emerging markets,” Mazda CEO Takashi Yamanouchi said.
Mazda desperately needs to reduce its exposure to the strong yen, which makes exports more expensive and reduces the value of earnings made overseas when expatriated. Last business year, it made more than two-thirds of its vehicles in Japan and shipped more than 80% for exports.
The factory in Mexico will be Mazda’s fourth overseas plant after the United States, China and Thailand - all held jointly with former top shareholder Ford Motor Co .
Shares in Mazda ended up 1.6% at ¥195 before the results, outperforming a rise in the benchmark Nikkei average.
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First Published: Fri, Jun 17 2011. 01 59 PM IST
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