Mazda Raises Profit Forecast on Yen and Fuel-Cutting Models

Mazda Motor Corp., the best performer on the Nikkei 225 Stock Average in the past three months, more than doubled its full-year profit forecast on a weaker yen and demand for its fuel-efficient vehicles.

Net income will probably reach 26 billion yen ($277 million) in the year ending March, compared with the carmaker’s previous projection of 10 billion yen, the Hiroshima, Japan-based company said in a statement today. That compares with the 16.3 billion yen average of 19 analyst estimates compiled by Bloomberg. The company also raised its forecasts for operating income and revenue.

Mazda, whose shares nearly tripled since it last announced financial results Oct. 31, benefits from a weaker Japanese currency because it exported about 80 percent of the cars it made in the country last year.

“They have a really big sensitivity from one yen change, so the weakening of yen will be purely positive for Mazda,” said Kota Yuzawa, an auto analyst at Goldman Sachs Group Inc. in Tokyo.

The carmaker benefited from demand for fuel efficient vehicles such as the CX-5 sport utility vehicles and Mazda 6 sedan and wagon. By March 2016, Mazda plans to equip 80 percent of its vehicles with its so-called SkyActiv technology to meet demand for cars that consume less fuel.

Mazda shares rose 4.4 percent to 283 yen at the close of trading in Tokyo, before the company announced its forecasts. The stock has gained 63 percent this year.

Weaker Yen

The yen has weakened about 14 percent against the dollar the past three months, the biggest decline among 10 developed-nation currencies tracked by Bloomberg. Mazda revised its outlook for the yen against the dollar to 81 from 80, and 104 from 100 versus the euro.

The carmaker raised its full-year operating profit forecast to 45 billion yen from a previous estimate of 25 billion yen. The company boosted its full year revenue outlook to 2.19 trillion yen from 2.17 trillion.

Mazda is seeking alliances with other carmakers in product development and production to boost its lineup and increase utilization of plants.

It will build a sub-compact based on the Mazda2 for Toyota Motor Corp. at a Mexico plant currently under construction. Production of the vehicle will begin in mid-2015 at a rate of 50,000 units per year, the companies said in November. The agreement will help Toyota strengthen its lineup in North America and increase production efficiency at Mazda, the companies said at the time.

The carmaker will also produce with Fiat SpA a new Alfa Romeo roadster that will be based on the next-generation Mazda MX-5, at its factory in Hiroshima from 2015, the companies said last month.