November 1, 2019 / 2:49 AM / 15 days ago

Mazda sees 30% FY profit drop on strong yen, weak sales in U.S., China

TOKYO (Reuters) - Mazda Motor Corp (7261.T) cut its annual profit forecast by nearly half on Friday as the Japanese automaker expects a strong yen and falling cars sales in the United States and China, its biggest markets, to drive earnings to a seven-year low.

FILE PHOTO: The logo of Mazda Motor Corp. is displayed at the company's news conference venue in Tokyo, Japan May 11, 2018. REUTERS/Kim Kyung-Hoon

Japan’s fifth-largest automaker expects to post 60 billion yen ($555.4 million) in operating profit for the year ending March, down from a prior outlook of 110 billion yen, and lower than a mean forecast of 69.5 billion yen from 20 analysts polled by Refinitiv.

It represents a cut of nearly 30% from 82.3 billion yen profit a year ago and would be its weakest performance since the year ended March 2013.

The downgrade comes after operating profit came in at 18.8 billion yen in the July-September quarter, falling for the fourth straight quarter.

However, it recovered from a 2.9 billion yen loss a year ago and was above analysts’ expectation of 14.4 billion yen.

Ryuichi Umeshita, Mazda’s head of global marketing, said the company struggled in China and the United States earlier in the year due to a lack of new products, prompting a slight downward revision in annual global sales.

For the year, it revised down its global sales forecast by 4% to 1.55 million vehicles, but said it would improve to around 1.8 million by March 2025.

Demand for Mazda vehicles, which include the Mazda3 sedan and the CX-5 SUV crossover, has slumped since the company posted record annual sales of about 1.6 million vehicles in the fiscal 2018.

Mazda posted global sales of 378,000 units for the quarter, down 4% from a year ago, partly due to sluggish sales in the United States and China.

For a link an interactive graphic on Mazda's operating profit, click on tmsnrt.rs/313WKYp

Global automakers have been grappling with a sales slowdown, as a prolonged trade war between Washington and Beijing and slowing growth in China have cut demand for cars in the world’s top two economies.

The slowdown comes as carmakers invest heavily in electric cars, autonomous driving technologies and ride-sharing services to survive a market shift away from car ownership.

Reporting by Naomi Tajitsu, Chris Gallagher and Bangaluru newsroom; Editing by Stephen Coates and Arun Koyyur

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