Mazda plunges into the red on battered demand

TOKYO - Mazda Motor Corp. said Thursday slumping sales and a strong yen dragged it into the red last quarter, and projected a full-year loss as global auto demand continues to flag.

Japan's fifth biggest automaker reported a net loss of 21.5 billion yen ($226 million) for the April-June quarter, reversing from a net profit of 15 billion yen a year earlier.

"Except China, sales in our key markets such as Japan and North America were all down due to battered demand," said Mazda spokesman Ken Haruki.

Sales plunged a worse-than-expected 44.5 percent to 428.2 billion yen.

Mazda's domestic sales fell 25 percent from a year earlier to 41,000 units during the quarter, while sales in North America dropped 32 percent to 74,000 units. Sales in Europe also declined 37 percent to 59,000 units.

China offered a lone bright spot with sales rising 26.8 percent to a record 41,000 units during the quarter.

Also eroding profit was the rising yen, which cuts the value of overseas earnings by exporters like Mazda when repatriated to Japan. Around 70 percent of Mazda's sales comes from aboard.

The Hiroshima-based automaker said it expected to stay in the red for the full fiscal year through March 2010 with a 50 billion yen net loss. Sales are likely to fall by 19.9 percent to 2.030 trillion yen.

"We are not expecting a quick recovery in global auto demand," Haruki said.

Mazda has maintained close ties with U.S. carmaker Ford Motor Co., which helped turn around its business decades ago, sending executives and sharing technology and auto parts to cut costs.

But Ford said last year it would sell the majority of its 33.4 percent stake in the Japanese carmaker as the financial crisis and sliding demand began to hurt the bottom line of the world's automakers.

Currently, Ford owns a 13.8 percent stake in Mazda.

The company reported after the close of trade Thursday. Mazda shares finished 8.6 percent higher at 264 yen as investors bought auto sector stocks on Honda Motor Co.'s better-than-expected results.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.