Mazda’s $1.1 Billion Hybrid Quest
Japan’s Mazda Motor Corp. said it would raise up to $1.1-billion (U.S.) in a share sale and invest most of the funds to develop hybrid and other technologies in what analysts said was a long-overdue bid to close the gap with rivals.
Mazda has been seen as a laggard in next-generation car technologies, especially after its ties with Ford Motor Co. (F-N7.000.162.34%) weakened when the cash-strapped U.S. auto maker reduced its controlling one-third stake in Mazda to 13 per cent last year.
“With the relationship weaker, there are certain things that Mazda now needs to do on its own, without Ford,” said Okasan Securities auto analyst Yasuaki Iwamoto. He added he did not expect other Japanese auto makers to raise equity.
Mazda, Japan’s fifth-largest Japanese auto maker, also halved its net loss forecast for the year to March, citing a stronger euro, cost cuts and better-than-expected sales globally.
Mazda said in a statement on Monday that it would raise up to ¥95.9-billion ($1.1-billion) by issuing 315.2 million new shares and selling 96.8 million treasury shares.
The offering underscores a race by companies to tap resurgent equity markets for funds. Japanese broker Nomura Holdings finalized plans on Monday to raise up to $5.1-billion in a share sale.
The news could trigger selling of Mazda’s stock over the near term as the offering could boost the total number of shares outstanding by up to 26 per cent, said Yoshihiko Tabei, an analyst at Kazaka Securities.
“But in the midterm it will be positive for Mazda’s growth,” Mr. Tabei said. “I don’t think Mazda is doing this public offering to bolster its finances. It is for strategic purposes, aiming to invest in eco-friendly technologies.”
Mazda has pledged it will raise its cars’ fuel economy by 30 per cent mainly by improving its internal combustion engines by 2015. It plans to gradually add electric components such as a hybrid system beyond that to meet stricter regulations.
The pressure to offer hybrid models has grown in Japan as consumers flock to the gasoline-electric vehicles, which receive the biggest tax breaks under a government initiative to drive sales of cleaner vehicles.
Mazda, which posted a third straight quarterly loss in April-June as the economic slump hit car sales worldwide, now expects to post a group net loss of ¥26-billion in the year to March, 2010. It had previously forecast a loss of ¥50 -billion.
An average estimate of 15 brokerages by Thomson Reuters I/B/E/S put the net loss at ¥38.12-billion.
It now expects an operating loss of ¥13-billion instead of ¥50-billion, as it lifted its global sales forecast by 55,000 vehicles to 1.155 million units on healthy sales of the Mazda3/Axela compact.
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