TOKYO -- Mazda reported a 76 percent slump in operating profit in the latest quarter, as unfavorable foreign exchange rates and falling wholesale volume hammered results.
Mazda's operating profit dropped to 6.5 billion yen ($59.6 million) in the fiscal third quarter ended Dec. 31, the company said on Wednesday in its quarterly earnings report.
Net income fell 37 percent to 15.8 billion yen ($144.9 million) in the three months.
Revenue declined 5 percent to 849.7 billion yen ($7.79 billion) in the period, as global retail sales flatlined at 376,000 units. Wholesale shipments declined 8 percent to 293,000 vehicles.
In announcing the results, Managing Officer Tetsuya Fujimoto said Mazda reduced marketing expenses and was achieving better per-unit profit in the latest quarter. But falling wholesale shipments and a huge hit from the Japanese yen's appreciation against the U.S. dollar, euro and other currencies more than offset gains from cost cutting and reductions in r&d spending.
Operating profit margin shrank to 0.8 percent in the quarter, from 3 percent a year earlier.
The automaker also dialed down its sales expectations for the second time this fiscal year.
In November, it downgraded its retail sales outlook, saying it expected sales to fall about 1 percent to 1.55 million vehicles in the current fiscal year ending March 31.
The new outlook, announced on Wednesday, predicts a 4 percent slide to 1.5 million. Volume will be pulled down by declines in Japan, China and markets including Australia, Mazda warned.
Still, Mazda kept its earnings outlook unchanged for the current fiscal year ending March 31.
Mazda forecasts a 27 percent tumble to 60 billion yen ($550.2 million), the lowest level since 2013. Net income is seen falling 32 percent to 43 billion yen ($394.3 million). Operating profit is poised to decline for the fourth straight year.
In the October-December quarter, North American retail sales expanded 5 percent to 102,000 vehicles, while European volume grew 34 percent to 82,000 units.
But at the wholesale level, Mazda moderated deliveries to rein in inventories. Shipments to North America advanced 3 percent and European wholesale volume increased 4 percent.
Mazda cut wholesale volume 19 percent in the home market of Japan.
Mazda books parent-company earnings from its wholesale deliveries.
Mazda CEO Akira Marumoto unveiled a new mid-term business plan last May to lift operating profit margin to a sustainable 5 percent by the fiscal year ending March 31, 2025.
The new plan also set a lower long-term sales goal than Mazda had earlier floated.
Mazda now targets global sales of 1.8 million vehicles in the fiscal year ending March 31, 2025. It had earlier wanted to sell 2 million vehicles in the fiscal year ending March 31, 2024.
Marumoto, who took office in June 2018, says his highest priority is spurring growth in the U.S., the automaker's biggest market. To do that, he wants to focus on strengthening Mazda's U.S. dealer network and making the most of its growing partnership with Toyota.
Mazda is trying to upgrade its dealer network before it opens a new plant it is jointly building in Alabama with Toyota.
Slated to open in 2021, the $1.6 billion plant will add 150,000 units of capacity to Mazda -- all of which will be devoted to a new crossover for the U.S. Mazda expects U.S. sales to soar after that, with the plant enabling it to sell 2 million vehicles globally.
In the fiscal third quarter, Mazda booked an 8-billion-yen ($73.4 million) charge for other costs, including outlays for the new U.S. plant and investment in the sales network upgrade.
Naoto Okamura contributed to this report