Mazda expects a 16 percent fall in operating profit this year

Article by Christian A., on June 17, 2011

Mazda Motor Corp expects a 16 percent drop in operating profit in 2011 as it reels under the supply chain disruptions after the March 11 earthquake and a stronger yen. The company forecasted a net profit of 1 billion yen from a 60 billion yen loss last year.

It also forecasted operating profit of 20 billion yen ($248 million) for the year ending March 2012. This is better than the 5.66 billion yen average estimate of 21 analysts compiled by Thomson Reuters I/B/E/S.

To seek growth in emerging markets, the company announced its plans on Friday to build a new plant in Mexico. This confirms a Thursday report of Reuters. Specifically, the company said that it will build a $500 million plant in the central Mexican state of Guanajuato under the trading company Sumitomo Corp. It will start production sometime between April 2013 and March 2014, and will mainly serve Central and South America.

The company will build the Mazda2 subcompact and Mazda3 compact cars, and engines at this new site. The plant's production capacity will be 140,000 units annually. It will employ around 3,000 at maximum capacity.

Sumitomo will hold 30 percent of the joint venture plant while the company will own 70 percent. The partners will also set up a sales company in the fast-growing market of Brazil, which will start operations in the business year beginning in April 2012.

This Brazilian unit will initially market and sell vehicles made in Japan and will eventually add units assembled at the new Mexico plant.

Topics: mazda, profit

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