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Mazda Cuts Loss; Analysts Still Skeptical : Autos: Projections for company's recovery called too optimistic. 1995 sales expected to be poor.

June 03, 1995|From Reuters

TOKYO — Troubled Mazda Motor Corp. managed to narrow its group net loss for its past fiscal year, but industry sources said the company, one of Japan's five biggest auto makers, may be too optimistic about its recovery this year.

Mazda, 24.54% owned by Ford Motor Co., announced Friday that it posted a group net loss of $484 million in the year ended March 31--an improvement from a loss of $576 million in 1993-94.

It expects the loss to shrink dramatically to $58.8 million in 1995-96, spokesman Tetsu Owari said.

"Our U.S. unit AAI turned into the black in calendar 1994 after being in the red in 1993," he said. "That contributed to the narrowed loss in 1994-95."

The parent company's efforts to slash costs in 1994-95 also helped cut the group loss, Owari said.

AutoAlliance International Inc. (AAI), a 50-50 venture between Mazda and Ford in Flatrock, Mich., produced 247,000 cars in 1994, up from 219,000 a year earlier, Owari said. AAI makes Mazda's MX-6 and 626 models and Ford's Probe.

But Koji Endo, a senior analyst at Lehman Bros. Japan, said, "It may be difficult for Mazda to achieve the projected smaller group loss this year, because poor sales of Mazda cars are expected at home and abroad."

Threatened U.S. trade sanctions are also a cloud over Mazda's earnings. Last month the United States announced $5.9 billion in proposed punitive tariffs on Japanese luxury car imports. The sanctions will be implemented if no agreement in the countries' car trade dispute is reached by June 28.

In April, Mazda said it would reduce its vehicle output in Japan in the April-June quarter by 20% to a total 180,000 to maintain proper U.S. inventory levels.

Meanwhile, it stopped exporting two luxury car models--the 929 and the Millenia--to the United States as of May 20 due to the pending tariffs.

Mazda's sales in the United States fell 2.8% from a year earlier to 358,470 cars in 1994-95, and its exports to Europe dropped 8.7% to 175,270 in the same period.

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