Mazda faces Mounting Global losses

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Mazda says it's considering capital increase after losses mount

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Mazda Motor Corp., the most unprofitable company among Japan's eight biggest carmakers, said it's considering boosting capital as four years of losses erode equity, threatening its credit rating.

Repairing Mazda's capital "is a must," President Takashi Yamanouchi told reporters in Tokyo Wednesday after the company's earnings presentation. "We are considering every option. Nothing has been decided."

The carmaker's 73 billion yen ($958 million) third-quarter loss, reported Wednesday, lowered the company's proportion of equity by 5 percentage points to 19.2 percent of its assets. The drop in the so-called equity ratio triggered Japan's Rating & Investment Information Inc. to warn it may lower its debt rating on Mazda within three months.

"R&I cannot overlook the further weakening of the financial base, which has already been weaker than the rating suggests," the debt-rating assessment company said in a statement.

A share sale would give Mazda room to keep its investment- level debt rating as mounting competition and the yen's appreciation prevents the company from making profit. Mazda yesterday downgraded its earnings outlook by projecting its biggest full-year loss in 11 years.

Mazda, whose shares tumbled 42 percent last year, rose 1.6 percent to close at 130 yen on the Tokyo Stock Exchange Wednesday.

Mazda's Yamanouchi said he's confident the company will return to profitability next fiscal year and that the carmaker is "aggressively" looking to form an alliance. CLSA Asia- Pacific Markets said in a report last week that Mazda will probably post losses through the year ending March 2014.

Mazda, which raised 93.3 billion yen in a share sale in 2009, Wednesday forecast it will post a 100 billion yen loss in the year ending March, five times the deficit it projected earlier and more than twice the 46 billion yen loss projected by the average of 19 analyst estimates compiled by Bloomberg.

Mazda is staring down the barrel of a $1.3 Billion loss this year...
Their Mazda 3 can gladly have the Australian sales crown..