Mazda lifts forecasts on robust H1, softer yen

TOKYO, Nov 2: Japan's Mazda Motor Corp. said on Thursday its half-year operating profit soared 43 percent as a weak yen and sales expansion in the West offset slumping domestic demand, and it lifted its forecasts as widely expected.

The Hiroshima-based auto maker, held one-third by Ford Motor Co., has been a prime beneficiary of the yen's steep decline because most of the cars it sells overseas are built in Japan.

Fanning profits further, Mazda's sales growth has occurred mainly in North America and Europe recently, and the yen's slide has boosted the value of dollar- and euro-denominated income.

Mazda's fortunes stand in sharp contrast to those of Ford, which posted its largest quarterly loss in 14 years as slower truck sales and restructuring charges took their toll.

For the year to March 31, the maker of the MX-5 sports coupe raised its operating profit forecast to 148 billion yen ($1.26 billion) from 135 billion yen, now calling for a 20 percent rise from last year's 123.4 billion yen.

A consensus forecast from 18 brokerages surveyed by Reuters Estimates put the operating profit at 146.2 billion yen.

Net profit is now seen at 82 billion yen in 2006/07 instead of 75 billion yen.

For the April-September first half, operating profit was 69.76 billion yen, in line with an average forecast of 70 billion yen in a survey of five brokerages by Reuters Estimates.

Net profit sank 12.5 percent to 27.21 billion yen after Mazda booked big one-off pension-related gains the year before. Revenue grew 12.5 percent to 1.52 trillion yen.

Mazda has won over many customers globally with the popular Mazda3 compact and the Mazda6 sedan before that, and is hoping to repeat their successes with the new CX-7 and CX-9 crossovers -- strategic products aimed mainly at expanding in North America.

But analysts note inventories for the CX-7 have swelled in the United States and said Mazda faced an urgent task of stepping up its marketing efforts, including for the upcoming CX-9.

Mazda also faces a higher risk than most of its Japanese peers from a potential yen strengthening, meaning it must expand production capacity overseas to build a natural hedge against adverse currency swings.

During the six months to Sept. 30, Mazda's shares inched up 0.1 percent, outperforming a 1.7 percent decline in Tokyo's transport sector subindex ITEQP.

Before the results on Thursday they ended down 0.3 percent at 794 yen, while the transport sector gained 0.52 percent.

REUTERS