April 27, 2018 / 6:58 AM / 4 months ago

Mazda sees stronger yen hitting full-year profit

TOKYO (Reuters) - Mazda Motor Corp (7261.T) forecast a 28 percent drop in full-year operating profit on Friday, hurt by a stronger yen as well as higher spending.

FILE PHOTO - Front quarter detail view of the new Mazda 6 being displayed at the Los Angeles Auto Show in Los Angeles, California U.S. November 29, 2017. REUTERS/Lucy Nicholson

Japan’s fifth-largest automaker said it expects operating profit to slide to 105 billion yen ($960.8 million) in the year through March, missing a median forecast for 136.9 billion yen from 19 analysts polled by Thomson Reuters I/B/E/S.

For the year just ended, its operating profit rose 16.5 percent to 146.4 billion yen, also below market forecasts.

Mazda continues to expand globally, extending its six-year run of rising vehicle sales. But as one of Japan’s smaller automakers, it faces growing costs to stay competitive in an industry which is being disrupted by new technologies, including self-driving cars and electric vehicles.

It is also investing in a new plant in the U.S. state of Alabama, a joint project with Toyota Motor Corp (7203.T) which will give Mazda a production foothold in the country.

The company forecast higher capital expenditure as well as research and development costs in the current year.

The automaker, which is highly exposed to currency swings due to its heavy reliance on exports from Japan, is assuming an average dollar rate of 107 yen this year, versus 111 yen last year. Its view on the euro was unchanged at 130 yen.

Mazda forecast global vehicle sales to rise 2 percent this year to a record 1.66 million units.

Mazda imports all of the vehicles it sells in the United States, making it vulnerable to rising costs if Washington imposes trade restrictions on foreign-made cars.

($1 = 109.2800 yen)

Reporting by Naomi Tajitsu; editing by Darren Schuettler

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