Mazda to release 36 models before March 2005 - Bloomberg
05-01-2003, 03:30 PM
#1
Registered User
Thread Starter
Join Date: Dec 2002
Posts: 124
Likes: 0
Received 0 Likes
on
0 Posts
Mazda to release 36 models before March 2005 - Bloomberg
Mazda May Sell Bonds, Borrow From Banks, Missing Debt Target
By Lindsay Whipp
Tokyo, May 2 (Bloomberg) -- Mazda Motor Corp., which has net debt of 404 billion yen ($3.4 billion), may sell bonds or borrow from banks this year to invest in new models and repay existing borrowings, a move that may make it miss a debt reduction target.
Japan's fifth-largest automaker, a third-owned by Ford Motor Co., said in November 2000 it will reduce its net debt to equity ratio, or gross debt minus cash divided by shareholders' equity, to 50 percent by March 2005 from 208 percent now. Mazda said it reduced debt nearly two-thirds in the past 7 years.
``It's quite possible (reaching the target) could take longer than 2004,'' Gideon Wolthers, Mazda's Chief Financial officer, said in an interview referring the year end March 2005. ``The important thing is the objective remains the same. We continue to focus on debt and we're making good progress.''
Mazda's dilemma is to either reduce debt and lower interest costs or invest in new products to help boost earnings, as it doesn't have substantial non-auto assets to sell. The company aims to spend 3.6 percent more on research this year and is working with Ford developing models.
``Mazda doesn't have many options at hand to reduce debt, so they have to use cash flow,'' said Norihito Kanai, who helps manage the equivalent of $2.5 billion at Meiji Dresdner Asset Management Co. ``It's a matter of how they can invest more efficiently with Ford to increase returns from their investment.''
Mazda said last week profit in the year March 31 almost tripled to 24.1 billion yen as it benefited from a weaker yen against the euro, cost cuts and sales from new models.
Increasing Spending
Mazda also plans to raise spending on factories and equipment a quarter this year as it aims to release 36 models in North America, Japan and Europe in the five years to March 2005.
The increase in spending will reduce cash flow this year to 40 billion yen from 47 billion yen for the business year just ended, Wolthers said.
Analysts and investors say now may be a good time for Mazda, which is rated Ba3 by Moody's Investors Service, to borrow. Interest rates in Japan are near zero and investors are shifting into corporate debt, including bonds from companies with lower credit ratings such as Mazda, because of the tumbling stock market and falling Japan government bonds yields.
The Bank of Japan yesterday unexpectedly decided to add more cash to the economy pushing yields on government bonds to a record low today.
The yield on Mazda's 1.9 percent bond due in March 2005 has fallen by 1.2 percentage points to about 1.7 percent since January. Mazda shares have fallen 6.6 percent in the same period, while the Topix Index of all shares has fallen 7.7 percent.
Reducing Debt
An index tracking the yield on Japanese corporate bonds due in 2005 rated Ba1, Ba2 and Ba3 by Moody's has dropped a percentage point to about 1.48 percent since the beginning of January.
``Rates are so low there's been a shift from JGBs to corporate bonds,'' said Jason Rogers, a credit analyst at Barclays Capital Japan Ltd. ``It's been such a benign funding environment over the past two months.''
Mazda plans to reduce its net debt 8.1 percent to 370.7 billion yen in the business year started April, lowering its net debt to equity ratio 38 percentage points to 170 percent, partly using cash flow, Wolthers said. The company may also borrow.
``We'll be looking at more credit facilities this year,'' Wolthers said. ``We have already started looking at various forms of refinancing: bonds, or syndicated loans, or a combination of the two.''
Mazda said last week it secured 100 billion yen in new funding in the year ended March 31, included a 38 billion yen loan. The company also sold 60 billion yen of convertible bonds, of which Ford bought a third.
Raising Funds
Mazda can raise funds from the market, Barclays Capital's Rogers said. ``Sentiment is that positive at the moment. The fact that low rated companies like (Marubeni Corp.) are able to come to the market suggests that Mazda could, with a fairly short-term bond, maybe three years.''
Marubeni, a Japanese trading house rated B1 by Moody's or one notch below Mazda, sold 15 billion yen of bonds last month and in March extended a portion of a 400 billion yen credit line from its main banks.
Mazda's debt target is part of a mid-term plan the company announced in November 2000 and runs through to March 2005. Wolthers said ``changes in the external environment'' such as the outlook for the U.S. economy this year make it ``premature'' to make debt forecasts for the next business year.
The United States is Mazda's biggest market outside Japan and it plans to raise sales 8.4 percent to 280,000 units in 2003, with sales of its Mazda6 sedan and its RX-8 sportscar. The company is planning to reduce inventory there, which may also help it control incentive spending from last year's $2,000.
U.S. auto sales sagged 3.2 percent since January as incentives General Motors Corp. and other U.S. automakers eat up future demand, investors have said. Sales have also been affected as the U.S.-led war in Iraq hurt consumer confidence.
Last Updated: May 1, 2003 11:01 EDT
By Lindsay Whipp
Tokyo, May 2 (Bloomberg) -- Mazda Motor Corp., which has net debt of 404 billion yen ($3.4 billion), may sell bonds or borrow from banks this year to invest in new models and repay existing borrowings, a move that may make it miss a debt reduction target.
Japan's fifth-largest automaker, a third-owned by Ford Motor Co., said in November 2000 it will reduce its net debt to equity ratio, or gross debt minus cash divided by shareholders' equity, to 50 percent by March 2005 from 208 percent now. Mazda said it reduced debt nearly two-thirds in the past 7 years.
``It's quite possible (reaching the target) could take longer than 2004,'' Gideon Wolthers, Mazda's Chief Financial officer, said in an interview referring the year end March 2005. ``The important thing is the objective remains the same. We continue to focus on debt and we're making good progress.''
Mazda's dilemma is to either reduce debt and lower interest costs or invest in new products to help boost earnings, as it doesn't have substantial non-auto assets to sell. The company aims to spend 3.6 percent more on research this year and is working with Ford developing models.
``Mazda doesn't have many options at hand to reduce debt, so they have to use cash flow,'' said Norihito Kanai, who helps manage the equivalent of $2.5 billion at Meiji Dresdner Asset Management Co. ``It's a matter of how they can invest more efficiently with Ford to increase returns from their investment.''
Mazda said last week profit in the year March 31 almost tripled to 24.1 billion yen as it benefited from a weaker yen against the euro, cost cuts and sales from new models.
Increasing Spending
Mazda also plans to raise spending on factories and equipment a quarter this year as it aims to release 36 models in North America, Japan and Europe in the five years to March 2005.
The increase in spending will reduce cash flow this year to 40 billion yen from 47 billion yen for the business year just ended, Wolthers said.
Analysts and investors say now may be a good time for Mazda, which is rated Ba3 by Moody's Investors Service, to borrow. Interest rates in Japan are near zero and investors are shifting into corporate debt, including bonds from companies with lower credit ratings such as Mazda, because of the tumbling stock market and falling Japan government bonds yields.
The Bank of Japan yesterday unexpectedly decided to add more cash to the economy pushing yields on government bonds to a record low today.
The yield on Mazda's 1.9 percent bond due in March 2005 has fallen by 1.2 percentage points to about 1.7 percent since January. Mazda shares have fallen 6.6 percent in the same period, while the Topix Index of all shares has fallen 7.7 percent.
Reducing Debt
An index tracking the yield on Japanese corporate bonds due in 2005 rated Ba1, Ba2 and Ba3 by Moody's has dropped a percentage point to about 1.48 percent since the beginning of January.
``Rates are so low there's been a shift from JGBs to corporate bonds,'' said Jason Rogers, a credit analyst at Barclays Capital Japan Ltd. ``It's been such a benign funding environment over the past two months.''
Mazda plans to reduce its net debt 8.1 percent to 370.7 billion yen in the business year started April, lowering its net debt to equity ratio 38 percentage points to 170 percent, partly using cash flow, Wolthers said. The company may also borrow.
``We'll be looking at more credit facilities this year,'' Wolthers said. ``We have already started looking at various forms of refinancing: bonds, or syndicated loans, or a combination of the two.''
Mazda said last week it secured 100 billion yen in new funding in the year ended March 31, included a 38 billion yen loan. The company also sold 60 billion yen of convertible bonds, of which Ford bought a third.
Raising Funds
Mazda can raise funds from the market, Barclays Capital's Rogers said. ``Sentiment is that positive at the moment. The fact that low rated companies like (Marubeni Corp.) are able to come to the market suggests that Mazda could, with a fairly short-term bond, maybe three years.''
Marubeni, a Japanese trading house rated B1 by Moody's or one notch below Mazda, sold 15 billion yen of bonds last month and in March extended a portion of a 400 billion yen credit line from its main banks.
Mazda's debt target is part of a mid-term plan the company announced in November 2000 and runs through to March 2005. Wolthers said ``changes in the external environment'' such as the outlook for the U.S. economy this year make it ``premature'' to make debt forecasts for the next business year.
The United States is Mazda's biggest market outside Japan and it plans to raise sales 8.4 percent to 280,000 units in 2003, with sales of its Mazda6 sedan and its RX-8 sportscar. The company is planning to reduce inventory there, which may also help it control incentive spending from last year's $2,000.
U.S. auto sales sagged 3.2 percent since January as incentives General Motors Corp. and other U.S. automakers eat up future demand, investors have said. Sales have also been affected as the U.S.-led war in Iraq hurt consumer confidence.
Last Updated: May 1, 2003 11:01 EDT
Thread
Thread Starter
Forum
Replies
Last Post
vetteor8
New Member Forum
3
08-09-2015 05:56 PM
MolecularConcept
New Member Forum
15
08-05-2015 04:43 PM