A higher tax bill and a sales mix of richer in lower-margin models undercut profits at Mazda Motor Corp. in the October-December quarter, despite rising global volume.
The export-dependent Japanese carmaker also trimmed its North American sales forecast, pledging Mazda would hold firm on prices amid mounting incentive pressure.
Global operating profit fell 5.1 percent to 48.0 billion yen ($400.2 million) in the fiscal third quarter ended Dec. 31, the Japanese automaker said today. Net income slumped 27 percent to 38.2 billion yen ($318.5 million) in the quarter.
The reversals came despite a 7.8 percent increase in global revenue to 739.7 billion yen ($6.17 billion) and a 3.7 percent gain in worldwide unit sales to 322,000 vehicles.
Tetsuya Fujimoto, executive officer for financial services, blamed the lower profits on a shift toward lower-margin nameplates such as the Mazda2 subcompact as customers waited for pricier ones such as the Mazda6 sedan to undergo minor model changes.
Corporate taxes were also 25 percent higher this year, taking a further bite out of quarterly net income, he added.
Vehicle sales added a meager 700 million yen ($5.8 million) to the company’s quarterly operating profit, underscoring the tight market and slim margins. Foreign exchange rate windfalls, by contrast, kicked in a whopping 5.6 billion yen ($46.7 million).
North America rises
Sales in North America, Mazda’s biggest market, rose 4.4 percent to 94,000 vehicles in the three months. European volume advanced 13 percent to 53,000 units, and Japan sales increased 3.9 percent to 53,000 vehicles. But business was flat in China and other markets, including Southeast Asia and Australia.
Mazda trimmed its global sales outlook by 20,000 vehicles to 1.4 million for the current fiscal year ending March 31, 2015.
That still marks a 5 percent increase over the previous year.
In North America, it now targets sales of 432,000 vehicles. That is up 11 percent from the previous year, but is below the 440,000 units the company had originally projected.
Sacrificing volume
Managing Executive Officer Masahiro Moro said Mazda expected to sacrifice some volume as it holds the line on pricing amid more aggressive incentive spending by rivals.
“The business environment has changed a lot, and there is quite a bit of underselling,” Moro said. “We thought it best to be conservative in adjusting our sales forecast. We didn’t want to force it and disrupt our operations.”
Despite the tempered sales ambitions, Mazda maintained its earlier full-year forecasts for operating profit and net income.
Lower sales, Mazda said, will be offset by bigger-than-expected gains from favorable foreign exchange rates.
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