TOKYO -- Mazda Motor Corp. beat expectations with a 12-percent jump in half-year operating profit even as a supply bottleneck kept sales in check, and it lifted its full-year forecast thanks to a weaker yen.
Having returned to a growth track after years of losses in the 1990s, Japan's sixth-biggest automaker, held one-third by Ford Motor Co., expects record profits this year as it shores up its U.S. operations, long its Achilles' heel.
Its retail sales in the United States and Europe slipped in the first half, but Mazda said that was mainly because of an intentional delay in the launch of new models such as the Mazda5 minivan in order to sell off older cars, as well as a dearth of supplies of the popular Mazda3 compact car.
"We're very confident that we can resume sales momentum in the second half," CFO Gideon Wolthers told a news conference.
Operating profit for April-September came to 48.78 billion yen ($418 million), above the average forecast of 45.6 billion yen in a survey of seven brokerages by Reuters Estimates.
Net profit climbed 66 percent to 31.09 billion yen as revenue rose 2.4 percent to 1.35 trillion yen.
Analysts were impressed.
"All in all, these are strong results," said Christopher Richter, auto analyst at CLSA Asia-Pacific Markets, attributing the fall in Mazda's U.S. sales last month to an especially strong October 2004.
"They have some new products coming in the U.S. and Europe, which should help," he added.
Mazda's U.S. sales in October fell 8.3 percent, according to the Automotive News Data Center, while the overall industry shrank 15.8 percent.
SALES INCENTIVES TO FALL
For the year to next March, Mazda boosted its forecast for operating profit to a record 95 billion yen from 90 billion yen based on a new assumption for the dollar to average 109 yen this year instead of 105 yen. The dollar was fetching around 116.9 yen on Wednesday.
Every one-yen rise in the dollar adds about 1.5 billion yen to annual operating profit, Mazda said.
But the company stressed that business conditions would be tough for the rest of the year, particularly given the persistent rise in commodity prices.
"We recognize that escalating raw material prices remain a significant challenge," Executive Vice President John Parker said.
Mazda left its net profit forecast at 55 billion yen, citing losses from currency hedging and other non-operating items.
Thanks to an aggressive product push and big cost cuts, Mazda is projecting the strongest profit growth among Japan's top car brands this year.
Second-ranked Nissan Motor Co. and third-ranked Honda Motor Co. last week reported weaker-than-expected profits, hit by ballooning sales costs in the United States.
Mazda, meanwhile, forked out less on U.S. sales incentives in the first half, Wolthers said -- an average $1,800 a vehicle even as local giants piled on thousands to work down inventories.
For the full business year, Mazda would aim to hold incentives at around $2,000 per car, down 10 percent from last year, partly with the introduction of new models in the light-truck segment, Wolthers said.
After slower-than-expected vehicle shipments in the first half, however, the maker of the MX-5 sports car cut its global volume forecast by 8,000 units to 1.17 million vehicles for the full business year.
Projections were lowered in Europe and Japan, but lifted in North America thanks to brisk demand in Canada, Mazda said.
But retail sales are expected to rise 5 percent in the United States and more than 15 percent in Europe in the latter half as new products hit showrooms, Mazda said.
Further out, Mazda plans to launch the new CX-7 crossover early next business year to expand sales in the lucrative U.S. market.