TOKYO - Mazda Motor Corp. confirmed on Monday its annual operating profit jumped 77 percent thanks to hefty cost cuts and healthy European sales, and forecast its highest income in a decade for this business year.
Reporting audited results, Japan's fifth-largest automaker said group operating profit for the year ended March 31 came to 50.66 billion yen ($432.7 million), in line with preliminary figures announced last month.
Sales grew 13 percent to 2.36 trillion yen.
Mazda, in the midst of a five-year turnaround plan, is counting on new models like the award-winning Mazda6/Atenza and Mazda2/Demio subcompact to boost global sales and put the company on a firm recovery track.
"This year, we want to extend our sales volume again and with that, boost our profits," Executive Officer Kiyoshi Ozaki told a news conference.
Last year, Mazda's bottom line was lifted mainly by costs cuts and favorable exchange rates, which added 51.6 billion yen and 19.7 billion yen at the operating level respectively.
For 2003/04, Mazda, one-third owned by Ford Motor Co., expects an improved product mix and a 3.5 percent rise in global sales volume to contribute 31.9 billion yen, compared with just 4.8 billion yen last year.
Mazda forecast operating profit to grow by another 28 percent to 65 billion yen this year, also boosted by a cost reduction of 50 billion yen.
The Hiroshima-based automaker, which has a relatively big exposure to Europe, also is expected to benefit from stronger sales in that region and a weaker yen against the euro.
But the company is faring worse in the United States, where sales of the Mazda6 have been sluggish. Some analysts noted that the new launches have caused a sharp drop in sales of older models, leading to a surge in inventories and posing a risk to its bottom line.
Mazda's inventory in the United States now stands at about 100 days, far above the 60 to 80 days the company deems ideal.
The automaker also is expecting a weaker dollar -- at 115 yen versus the 122 yen average last year -- to offset a favorable rise in the euro. Overall, it expects the currency factor to shave four billion yen from operating profit this year.