JAPAN’S MAZDA Motor is to raise up to $1.1 billion (€750 million) in a share sale and invest most of the funds to develop hybrid and other technologies in what analysts say is 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 weakened when the cash-strapped US carmaker 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 motoring analyst Yasuaki Iwamoto. He added that he did not expect other Japanese carmakers to raise equity.
Mazda, Japan’s fifth-largest carmaker, 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 yesterday that it would raise up to 95.9 billion yen (€750 million) 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 finalised plans yesterday 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 mid-term it will be positive for Mazda’s growth,” he 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 also plans to gradually add electric components such as a hybrid system to meet stricter regulations.
The pressure to offer hybrid models has grown in Japan as consumers flock to the petrol-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 to June as the economic slump hit international car sales, now expects to post a group net loss of 26 billion yen in the year to March 2010. It had previously forecast a loss of 50 billion yen.
An average estimate of 15 brokerages put the net loss at 38.12 billion yen.
It now expects an operating loss of 13 billion yen instead of 50 billion yen, as it lifted its global sales forecast by 55,000 vehicles to 1.155 million units on healthy sales of the Mazda3/Axela compact. – (Reuters)
