Mazda slumps to quarterly loss as pandemic torpedoes US rebound

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TOKYO — Mazda Motor Corp. slumped to a net loss in the latest quarter as tumbling sales and factory closures forced by the COVID-19 pandemic hammered the bottom line.

Operating profit fell 55 percent to 11.3 billion yen ($104.8 million) in the fiscal fourth quarter ended March 31, the automaker said on Thursday in its earnings announcement.

At the net level, Mazda plunged to a loss of 20.3 billion yen ($188.3 million) in the January-March period, from a net income of 27.8 billion yen ($257.9 million) a year earlier.

Revenue declined 7 percent to 874.0 billion yen ($8.12 billion) in the three months. Global retail sales slid 20 percent to 313,000 vehicles; wholesale volume fell 9 percent to 318,000.

Citing uncertainty about the business environment as the world grapples with the COVID-19 pandemic, Mazda withheld a forecast for the current fiscal year ending March 31, 2021.

“Operations at our dealerships are starting again, and we feel sales are on a recovery trend in the U.S.,” Senior Managing Executive Officer Akira Koga said while announcing the results. “But given a possible second wave of infection, there is uncertainty in other countries. So, at the moment, we can’t say when sales demand will recover globally or on a country basis.”

The pandemic slowdown chopped about 10 billion yen ($92.8 million) off Mazda’s quarterly operating profit and suppressed sales volume to the tune of 90,000 vehicles worldwide.

Widespread U.S. lockdowns also torpedoed robust sales momentum for Mazda. The brand’s U.S. sales were up 19 percent through February on growing demand for its crossovers. But Mazda chalked a 4.5 percent first-quarter decline, in an overall market down 13 percent.

Mazda had been making progress in reducing incentives and shifting its model mix toward higher-margin crossovers. About 52 percent of its global volume came from crossovers in the just-ended fiscal year, compare with 49 percent the year before and 29 percent in 2015.

In the latest quarter, Mazda’s North American retail sales fell 9 percent to 92,000 vehicles. Its sales in Europe dropped 39 percent to 45,000 units. China volume tanked 31 percent to 36,000.

Mazda’s dour report comes as automakers worldwide reel from the impact of plunging demand, suspended production and broken supply chains.

Nissan and Mitsubishi had earlier warned they would book full fiscal year net losses. Meanwhile, Honda reported this week it had net and operating losses in the latest quarter, and Toyota’s net income dropped 86 percent.

Mazda had earlier warned its full fiscal year net income would fall 81 percent because of the impact of the pandemic. For the full fiscal year ended March 31, Mazda’s net income tumbled to 12.1 billion yen ($112.2 million). The company had earlier predicted net income would take a lesser 32 percent fall to 43.0 billion yen ($398.8 million) in the 12-month period.

Meanwhile, full fiscal year operating profit fell 47 percent, worse than the earlier outlook for a 27 percent decline. Mazda’s global sales retreated 9 percent to 1.419 million vehicles.

“They were tough numbers,” Koga said of the profit plunge. “One of the challenges is we must improve the quality of sales and achieve growth in both revenue and volume at the same time.”

Mazda said it is working now to thin out inventories that have accumulated worldwide during as showrooms closed worldwide during pandemic lockdowns. Koga said the company will not resume full-swing production until it sells off the stockpile to an “appropriate” level.

Said Koga: “We will prioritize selling cars from the piled-up inventory and try to regain cash without getting caught up in incentive competition in the market.”

 Naoto Okamura contributed to this report

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Saurabh Shukla

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