Published on April 8th, 2013 | by Daniel Sherman Fernandez0
Mazda Motor Corp Profit Rises With Weaker Yen
The downward movement in the Japanese yen has turned Mazda Motor Corp.’s biggest weakness into its biggest strength. All Mazda has to do now is sell more cars to benefit from the favorable exchange rate against the UD dollar and Euro. Japan’s 5th largest car company has the wind of the yen’s 16% descent in the past six months in its sails. Shares have tripled to their highest level since 2008 as more-profitable exports and cost reductions steer Mazda toward its first annual profit in five years.
Despite Mazda’s status as the top performer on Japan’s benchmark stock index over the past six months, the Hiroshima-based carmaker needs to make a hit out of a new version of the Mazda3, its top seller, due this fiscal year, to prove it doesn’t require a weak yen to compete against its bigger rivals.
Few companies better illustrate how Japanese Prime Minister Shinzo Abe is reversing Japan’s fortunes by weakening the yen. About a year ago, Mazda was so desperate for cash that it printed 1.22 billion new shares, equivalent to almost 70 percent of outstanding stock, at the expense of existing investors, who saw their holdings diluted. The stock fell to record lows. Now, the cheaper local currency is giving Mazda CEO Takashi Yamanouchi, 68, breathing room to show his turnaround efforts are bearing fruit and for the company to focus on rolling out new models.