JAPAN: Mazda boosts H1 net profit by 68%

By just-auto.com editorial team | 9 November 2004

Operating profit at Mazda Motor Corporation increased by 53% to 43.5 billion yen for the first half of fiscal 2004, with net income increasing by 68% from year-ago levels to 18.7 billion yen.

"The results have put the company well on course to achieve its best ever, full-year operating profit," Mazda said in a statement.

In the first half ended September 30, 2004, Mazda also boosted consolidated revenue by 111.1 billion (9%) year on year to 1,320.6 billion yen. Ordinary profit was 36.9 billion yen, up 17.9 billion yen from a year ago.

Mazda said the profit gains were largely supported by increased revenue through continued sales strength in Europe, stronger sales of new products such as the 3/Axela and the company's continued efforts with its so-called 'Achieve Best Cost (ABC)' initiative to drive down cost.

The one third owned by Ford car maker's chief financial officer Gideon Wolthers said: Good momentum in the first half has given us the confidence to raise our full-year outlook. We are now on course to achieve an all-time record of 78 billion yen in operating profit. And it is worth noting the last time our operating results were close to that level, the year was 1985 and the yen stood at 245 to the dollar."

Consolidated cash flow was negative 14 billion yen. Net debt increased by 5.2 billion yen to 363.3 billon yen compared to the end of FY2003, and the debt-to-equity ratio improved by 10% to 151%.

Full-year sales revenues are projected to be 2,710 billion yen, an increase of 5% over year-earlier levels, excluding the impact resulting from the fiscal year change at overseas operations in

FY2003. Full-year projections for ordinary profit and net income have also been increased to 74.0 billion yen (up 16.0 billion yen from FY2003) and 37.0 billion yen (up 3.1 billion yen) respectively.

The statement said Mazda management has recommitted itself to so-called "Mazda Momentum." a new mid-term business plan that envisages where the company wants to be in 10 years' time.
Under the plan, the car maker will build a foundation for full-scale growth while, at the same time, sustaining its present, positive sales and profit momentum.

"Mazda Momentum is the theme my management team adopted as it worked to create a new plan to focus the company's efforts around a common goal of maintaining our hard earned momentum," said Mazda Motor Corporation president and CEO Hisakazu Imaki.

"We have made solid progress, but I am not yet totally satisfied.  We must further accelerate our momentum. This period of time will be the most critical for us. We have a vision of where we want to be in ten years' time, but for now we must deliver strong results, strengthen our position in key markets, invest aggressively in R&D, find more global efficiencies and leverage our human resources," Imaki added.

Mazda Momentum includes key, mid-term corporate targets for FY2006. One goal is a new, record level of operating profit in excess of 100 billion yen which the company expects to achieve through wholesales of 1.25 million units, up 120,000 units from projected FY2004 levels. Mazda is also targeting reducing its debt-to-equity ratio from a present level of 151% to below 100% by FY2006.

Actions in its Mazda's various global markets will include improved customer satisfaction and the launch of new vehicles developed specifically for individual markets - critically including three SUV/crossover-type models developed primarily for the North American market.

Mazda also plans to increase R&D spending by 30% by FY2006 from present levels. The pace of new product launches will also be increased, with 16 important new vehicle launches planned in key global markets by the end of calendar year 2006.

The first of these, the 5 minivan destined for the key Europe and US markets, was launched recently at the Paris motor show.

"Investing in the future while simultaneously focusing on sustaining our momentum is the task my management team faces," added Imaki.

"I believe this will be a very challenging period for Mazda and a period of fundamental change."