Mazda faces Mounting Global losses

[jpd80]

Mazda says it's considering capital increase after losses mount

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Mazda Motor Corp., the most unprofitable company among Japan's eight biggest carmakers, said it's considering boosting capital as four years of losses erode equity, threatening its credit rating.

Repairing Mazda's capital "is a must," President Takashi Yamanouchi told reporters in Tokyo Wednesday after the company's earnings presentation. "We are considering every option. Nothing has been decided."

The carmaker's 73 billion yen ($958 million) third-quarter loss, reported Wednesday, lowered the company's proportion of equity by 5 percentage points to 19.2 percent of its assets. The drop in the so-called equity ratio triggered Japan's Rating & Investment Information Inc. to warn it may lower its debt rating on Mazda within three months.

"R&I cannot overlook the further weakening of the financial base, which has already been weaker than the rating suggests," the debt-rating assessment company said in a statement.

A share sale would give Mazda room to keep its investment- level debt rating as mounting competition and the yen's appreciation prevents the company from making profit. Mazda yesterday downgraded its earnings outlook by projecting its biggest full-year loss in 11 years.

Mazda, whose shares tumbled 42 percent last year, rose 1.6 percent to close at 130 yen on the Tokyo Stock Exchange Wednesday.

Mazda's Yamanouchi said he's confident the company will return to profitability next fiscal year and that the carmaker is "aggressively" looking to form an alliance. CLSA Asia- Pacific Markets said in a report last week that Mazda will probably post losses through the year ending March 2014.

Mazda, which raised 93.3 billion yen in a share sale in 2009, Wednesday forecast it will post a 100 billion yen loss in the year ending March, five times the deficit it projected earlier and more than twice the 46 billion yen loss projected by the average of 19 analyst estimates compiled by Bloomberg.

Mazda is staring down the barrel of a $1.3 Billion loss this year...
Their Mazda 3 can gladly have the Australian sales crown..

[prydey]

the vfacts charts aren't really painting the true picture are they.

not something i expected to be reading, but i guess most are in the same boat.

[Dr Smith]

Must say I thought Ford should have hung on to their sharerholding of Mazda when they sold down as I thought their sales growth was going to increase profits...I guess those smarter heads at Ford with their information knew exactly what they were doing.

[ebxr8240]

Out of all the Jap car makers I thought Mazda would have been a lot better...
Panasonic is another company loosing big time also..

[jpd80]

Here's the deal, every brand Ford sold off or discontinued would have cost Ford a packet in next product cycle development costs.

Even though Ford owned at best 30% of Mazda, that would have meant exposure to
a $1.3 billion loss as well as the tip in of funding now required to keep them afloat.

Jaguar-Land Rover product cycle was costed internally at close to $8 billion,
Volvo was similar, Product cycle was going to cost around $5 billion and that's
why Ford sold all of them for $4 billion but kept engine supply contracts.

Ford saved money by avoiding exposure to rising costs without any sign of return,
and it's the same reason why they paired back Falcon production in Australia
instead of pressing hard with taxi sales and more government discount fleet sales.

[SteveJH]

Originally Posted by jpd80

Here's the deal, every brand Ford sold off or discontinued would have cost Ford a packet in next product cycle development costs.

Even though Ford owned at best 30% of Mazda, that would have meant exposure to
a $1.3 billion loss as well as the tip in of funding now required to keep them afloat.

Jaguar-Land Rover product cycle was costed internally at close to $8 billion,
Volvo was similar, Product cycle was going to cost around $5 billion and that's
why Ford sold all of them for $4 billion but kept engine supply contracts.

Ford saved money by avoiding exposure to rising costs without any sign of return,
and it's the same reason why they paired back Falcon production in Australia
instead of pressing hard with taxi sales and more government discount fleet sales.

So basically they asset stripped the companies as much as they could while still maintaining them as enough of a going concern that they could still sell them off.

[Whitey-AMG]

Originally Posted by SteveJH

So basically they asset stripped the companies as much as they could while still maintaining them as enough of a going concern that they could still sell them off.

Yes - maybe - but don't forget that MAZDA struggled big time back in the 60's and may have collapsed if it wasn't for FORD investing in them. Ford also stuck by them in the late 90's when the whole asian financial crisis bit hard as well....

Bit like parenting a rogue teenager - eventually - you just have to let go and hope for the best !

[jpd80]

Originally Posted by SteveJH

So basically they asset stripped the companies as much as they could while still maintaining them as enough of a going concern that they could still sell them off.

Ford didn't asset strip Mazda, they just stopped bankrolling their projects.

[Resurrection]

Alan Mulally is a genius.

[BHDOGS]

Impossible Australians number 1 selling car can't lose money oh wait!

[jpd80]

Originally Posted by BHDOGS

Impossible Australians number 1 selling car can't lose money oh wait!

Not the 3 itself, it looks like Mazda is not big enough to cover all of its production
and costs in other major markets, that is worrying and why Ford jettisoned them..

[sxckevo]

I must say i'm very surprised with this new too, i thought they would've been doing well.

Thanks for your posts jpd80, they are always an insightful read.

[mik]

that is surprising , i would have thought mazda was one of the more profitable car companies .

[XRtowcar]

Wonder if the Japanese government will bail them out?

[Nikked]

What a shame, Mazda have really lifted their game over the past 10 or so years, some of the best stuff japan has done.

[Joe5619]

I would be very very very very interest to know if Mazda made a loss or profit in Australia??

[Brazen]

Originally Posted by Joe5619

I would be very very very very interest to know if Mazda made a loss or profit in Australia??

I remember reading an article a year or so back showing Mazda Australia making a record profit.

I have a feeling Mazda's problems stem in the US where they cant seem to crack the midsize and SUV market. I also think they are more heavily exposed to the European market than other Japanese makes, and with the economy over there they must be suffering.

[Wretched]

Hopefully they rebount quickly I am keen on their current range and do like the look of the Mazda6 concept.
Though I am interested in knowing why the great loss?

[janddbone]

All the financial reports have detialed Mazda's losses over the last few years, interesting that it is surprising so many people. I agree with all the sell off's, except Volvo, no way the outlay would have been that high for the next models. All Volvo's were already on shared platforms, ALL of the hard work was done!

[jpd80]

Originally Posted by brett.r.johnstone

All the financial reports have detialed Mazda's losses over the last few years, interesting that it is surprising so many people. I agree with all the sell off's, except Volvo, no way the outlay would have been that high for the next models. All Volvo's were already on shared platforms, ALL of the hard work was done!

It's a common misconception that all of Volvo's platforms were shared with Ford,
they collaborated with C1 but the S40 had a lot of changes and P24 is definitely different to EUCD,
it has an AWD variant for a start and different front structural members to accommodate Volvo V8

Volvo is looking at huge technical changes for the next product cycle, that's where the money is going...

[JG34JA]

Must say I'm quite surprised at this kind of situation for a producer of what is regarded in Australian sales and common understanding as great cars for private buyers.

A quick comparison of the stock chart in the last 5 years to Toyota (NYSE) and Ford (NYSE) shows a great underperformance. Maybe I'm not comparing apples with apples - but then I used MZDAF ticker on bloomberg I see 1.69 and a similar underperformance.

The other thing to note was the great outperformance by Ford. Thanks to those who have suggested reasons why Mazda is in such a position. And more kudos to Alan Mullaly.

[Windsor220]

While Mazda has a good rep with private buyers they are actually one of the most unreliable Japanese manafacturers. They have a number of recalls going on at the moment one of them a complete rebuild of the Mazda 6 engine. They have a lot of premature failures of turbos too. This sort of stuff would be costing them money considering how many cars they sell.

[vztrt]

Originally Posted by brett.r.johnstone

All the financial reports have detialed Mazda's losses over the last few years,

I was always reading this as well (mind you haven't bothered in the last couple of years). So this news didn't come as any real surprise.

[Luke Plaizier]

Australian views on cars are warped.

Mazda and Subaru are junk imports in the US. They aren't pleasantly styled for European tastes. But in Australia we treat them as quality, well styled imports.

In Europe Ford is regarded very highly thanks to it's emphasis on handling, and in the US as well due to it's home-grown history and F-150 ruggedness. Yet in Australia FORD is perceived as the maker of junk.

And all of this due to marketting.....


Lukeyson

[Nikked]

Originally Posted by Luke Plaizier

Mazda and Subaru are junk imports in the US. They aren't pleasantly styled for European tastes. But in Australia we treat them as quality, well styled imports.

Well, mazda's are...i'd rate them as the best out of Japan.

[Nic85]

if only they took the 3L V6 diesel with them... .

[Nikked]

I can't find much about Mazda recalls, besides a spider blocking a fuel vent and wiper failures on Mazda 3's.

It seems Mazda have less then toyota...?

[.FoMoCo.]

Originally Posted by Nikked

I can't find much about Mazda recalls, besides a spider blocking a fuel vent and wiper failures on Mazda 3's.

It seems Mazda have less then toyota...?

look up the rx8 recalls....

[Windsor220]

Originally Posted by Nikked

I can't find much about Mazda recalls, besides a spider blocking a fuel vent and wiper failures on Mazda 3's.

It seems Mazda have less then toyota...?

Mazda 3 has a power steering pump and pipe replacement one plus a wiper motor fix for cutting out due to poor earth. Have been regularly doing these 2 for months now. Thousands affected.

Mazda 6 has an engine rebuild due to the piston pin clips falling out and wrecking the bores.

New BT-50 has one for loose bolts in the gear lever housing. Some have fallen out.

Then you have issues which aren't recalls
RX8s are an ongoing concern with engines that cant last the distance.

Cars with the L3 motor mainly CX7s have the turbos wear out at around the 50-100k km mark. Seen lots of these. Not a cheap fix.

Thank god for them the Tribute is out of warranty now.

[Nikked]

Originally Posted by Windsor220

RX8s are an ongoing concern with engines that cant last the distance.

Well, it is a rotor...