Mazda saw its net income drop by 81% for fiscal year 2020 due to the impact of the pandemic, officials said.
Mazda Motor Corp reported its fiscal year 2020 net income slid 81% to 12 billion yen, or $111.9 million – an eight-year low – and due to the coronavirus pandemic the Japanese automaker has a large build-up in its U.S. vehicle inventory that has undercut efforts to boost cash flow.
Meanwhile, Mazda executives confirmed that like other automakers large and small, it has turned to outside lenders to line up a $2.8 billion line of credit to help the company ride out the economic shock created by the COVID-19 pandemic.
The credit will ensure the company can maintain its operations, company executives said during their annual financial conference in Japan.
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Mazda’s new crossover, the CX-30, slots right between the CX-3 and CX-5, and is part of the company’s effort to draw more buyers with new products.
Mazda executives also declined to provide an earnings forecast for this business year. Any forecast would be “highly unreliable” in the face of the pandemic, which has stalled sales in the world’s largest and most important markets for new vehicles such as China, North America, Europe and its home market of Japan.
Nevertheless, Mazda executives said the company, which is celebrating its 100th anniversary in 2020, has not halted investments in new products or in investments that would enhance customer experience in critical markets.
In fact, Tetsuya Fujimoto, Mazda’s managing executive officer in charge of Finance, said that its medium-term management plan would proceed, which includes measures like reducing marketing expenses and improving per-unit profit to achieve improvement of sales quality.
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Shelter-in-place orders in the United States, Mazda’s biggest market, have left its dealerships unable to sell cars. Shipments from Japan also remain parked at U.S. ports, which need to be sold before production at home can return to pre-virus levels, said Akira Koga, a senior managing executive officer.
Mazda’s first EV will be the MX-30 SUV, which debuted in concept form at last year’s Tokyo Motor Show.
“By improving our inventory situation, we need to recover our cash flow position as soon as possible,” Koga said during the teleconference.
During the financial year ending March 31, Mazda’s operating profit dropped by 47%, which included $1 billion in virus-related expenses. The operating profit, however, far better than a Refinitiv consensus estimate of 25.7 billion yen in profit, according to Reuters.
(Mazda squeezes the new CX-30 into its expanding crossover line-up.)
Mazda’s unit sales for the financial year ending March 31 also dropped by 9%, according to the financial information released by the company.