In FY March 2012, although we had difficulties amidst the severe business environment, we achieved significant progress in establishing a foundation for resuming the offensive.
FY March 2012 began in the wake of the Great East Japan Earthquake and saw record-breaking high levels of the yen, catastrophic flooding in Thailand, and the financial crisis in Europe. These factors created a difficult business environment, in which Mazda had an operating loss of 38.7 billion yen. The write-off of deferred tax assets, advanced booking in the fourth quarter of business structural improvement costs, and other factors resulted in a net loss of 107.7 billion yen.
However, with strong determination we continued our diligent efforts to achieve our key objectives, and produced significant results. First, on the product front, in 2011 Mazda ushered in the inaugural year of the SKYACTIV era by rolling out a succession of products featuring this cutting-edge technology to the world. The first such product, the Mazda Demio (known overseas as Mazda2) with SKYACTIV TECHNOLOGY*1 was introduced to the Japanese market in June of that year. In September, the SKYACTIV TECHNOLOGY equipped Axela/Mazda3 was launched in Japan, North America, Australia and other major overseas markets. In February 2012 the CX-5 was introduced to global markets as the first model to fully incorporate SKYACTIV TECHNOLOGY; it has enjoyed high acclaim, with initial sales results far exceeding our expectations. In terms of management, in February 2012 Mazda announced its Structural Reform Plans to reinforce the Framework for Medium- and Long-Term Initiatives. This plan includes projection to increase the ratio of models with SKYACTIV TECHNOLOGY to 80% and increase the overseas production ratio, mainly in emerging countries, to 50% by March 31, 2016. In implementing the plan, Mazda secured funds for future growth and solidifying a financial base by public offering of shares and subordinated loan financing. Thus far, the Company is steadily pushing forward with specific measures, following the future scenario drawn up to overcome the severe business environment.
Regarding the Great East Japan Earthquake, Mazda Group companies are vigorously working together with suppliers and other partners to help affected regions recover from the disaster. Through these activities we gained valuable experience, learning that if people work in concert to achieve common goals, they can produce truly remarkable results. We will continue our initiatives to ensure the continuity of Company operations, by further strengthening coordination with our partners.
We intend to make CSR an integral part of our daily business operations.
I believe that CSR, in the true sense, should be implemented as part of everyday operations, rather than in special programs geared toward CSR fulfillment. All employees of Mazda Group companies should carry out their responsibilities as required by society through daily work, and contribute to society as a matter of course.
To realize such CSR initiatives, Mazda has designated the following six initiative areas: Environmental Protection, Social Contributions, Respect for People, Customer Satisfaction, Compliance and Information Disclosure.
All of these are important, but we place particular emphasis on Environmental Protection, Social Contributions and Respect for People.
We contribute to environmental protection mainly through our products and technologies.
As an automobile manufacturer, we obviously believe that it is important for Mazda to contribute to environmental protection through its vehicle products and technologies. In 2007, Mazda announced its long-term vision for technology development called "Sustainable Zoom-Zoom". The basic policy of the vision is to "provide all customers who purchase Mazda vehicles with driving pleasure as well as outstanding environmental and safety performance. "With its proprietary SKYACTIV TECHNOLOGY, the Company made comprehensive improvements to base technologies, so as to meet its goal of raising the average fuel economy of Mazda vehicles sold worldwide by 30% by 2015, compared with 2008 levels.
Notably, the CX-5, equipped with a clean diesel engine, achieves the best fuel economy, the highest of any SUV*2, and is receiving acclaim far exceeding expectations. I am proud that such a high evaluation denotes the gradual acceptance of Mazda's way of thinking; that it is necessary to develop an approach to automobile-related environmental issues using multiple solutions, not ones limited only to electric and hybrid vehicles, and offers clean diesel as a new alternative. Particularly in Japan, Mazda has strived to create a diesel market, and now we can sense a positive response. We will continue our endeavors to familiarize many more people with the attractiveness of our products.
We are committed to continuing social contribution activities tailored to each country and region, with a long-term perspective.
Currently, Mazda products are purchased by customers in more than 120 countries, and the Company is implementing a variety of social contribution activities that meet the needs of their respective countries and regions. We consider it important to continue our social contributions, even when our Company is experiencing unfavorable business conditions.
Taking Japan as an example, for 31 years Mazda has annually opened the grounds of the Hiroshima Plant to host the Ekiden Road Relay Race. The Mazda Museum has welcomed over 1 million visitors through its doors in the 18 years since its opening. As evidenced by these examples, Mazda's social contributions are characterized by long-lasting activities.
We will continue seeking to gain the understanding of stakeholders in each country and region regarding Mazda's efforts and perspective on social contributions, while remaining committed to appropriate initiatives in a uniquely Mazda Way, taking into account stakeholders' opinions and needs.
While promoting the expansion of overseas production, we will continue to resolutely adhere to our conviction that respect for human rights is fundamental to our corporate activities.
We have declared, both inside and outside the Company, that Mazda is determined to eliminate human rights violations from its business activities. This declaration is rooted in the strong belief that Mazda must never tolerate human rights violations of any kind. The Company has established a system for providing human rights consultation for employees of Mazda and its Group companies in Japan and overseas, and for dealing impartially with the issues consulted upon. Moreover, in 2010 Mazda created the Mazda Supplier CSR Guidelines, which include provisions relating to respect for people (human rights and labor). In asking our suppliers to comply with these guidelines, Mazda is working together with suppliers to eliminate human rights violations.
Henceforth, we plan to bolster overseas production, primarily in emerging countries. As always, Mazda will remain firmly committed to its corporate policy; we must never tolerate human rights violations of any kind, including child labor and forced labor. We will continue to maintain and enhance respect for people, on a global scale.
We will realize a sustainable future while maintaining domestic production and striving for Monotsukuri Innovation.
As a company with production bases in Hiroshima and Yamaguchi Prefectures Japan, Mazda believes it has great responsibility for regional economy and employment. Mazda has a plan to raise the ratio of overseas production, from the present 30% to 50% by the end of FY March 2016. However, this will be done by increasing total production volume, with domestic production projected to be 850,000 units. We set this goal because we wish to ensure employment in Japan, so as to give back to the local communities that have supported and fostered our Company's development. To achieve this goal, it is necessary to produce vehicles that are profitable even when manufactured in Japan and exported overseas, assuming an exchange rate of 77 yen to the dollar and 100 yen to the euro. SKYACTIV TECHNOLOGY and Monotsukuri Innovation are the embodiment of what we have pursued in order to realize this goal. Mazda intends to produce positive results and contribute to regional economic growth by continuing to retain a portion of its manufacturing base in Japan and sustaining the 850,000-unit production level there.
Thanks to support from local communities, Mazda is marking the 92nd anniversary of its founding. Mazda will continue growing as a company that can live up to the expectations of diverse stakeholders, by realizing a sustainable future and making a contribution to society.
- *1SKYACTIV TECHNOLOGY
- *2SUVs sold in Japan including hybrids, micro-minis and imported vehicles. January 2012 Mazda data.