Management Conditions and Dividends

Management Conditions and Dividends for FY March 2015

With regard to the business environment surrounding the Mazda Group, although the FY March 2015 saw a drop in crude oil prices, slowdowns in emerging market economies, and unstable foreign exchange markets, Mazda was able to achieve steady growth though structural reforms leveraging SKYACTIV TECHNOLOGY, and enhanced brand value by offering attractive, uniquely Mazda products and services.
In terms of products, Mazda launched the new Demio/Mazda2, as the fourth new-generation product featuring SKYACTIV TECHNOLOGY and KODO design. It has earned high marks from the public both in Japan and overseas, showing steady sales performance. Moreover, in February 2015, as the fifth new-generation product, the new CX-3 compact crossover SUV, was launched globally. As a result, the portion of unit sales represented by SKYACTIV– equipped vehicles rose to 74% in FY March 2015, contributing to unit sales growth, improved profitability, and the strengthening of the brand.
In the production area, the Company is pushing ahead with the restructuring of its global production. The new plant in Mexico achieved its planned production volume of 140,000 units in FY March 2015, while an engine machining plant also began operating. In January 2015 mass production of the new “SKYACTIV-DRIVE” automatic transmissions began at the new transmission plant in Thailand. The new engine plant at the facility will start mass production of engines in the third quarter of FY March 2016.
In addition to the strong sales of the CX-5 and the Axela/Mazda3, with the launch of the new Demio/Mazda2, global sales volume was up 5% year on year at 1,397 thousand units, the highest in the last 20 years. Net sales amounted to ¥3,033.9 billion, up ¥341.7 billion year on year, owing to increasing sales of SKYACTIV-equipped models in global markets. Operating income amounted to ¥202.9 billion, up ¥20.8 billion year on year, owing to improvements in volume and the product mix as well as ongoing cost improvements through “Monotsukuri Innovation.” Net income amounted to ¥158.8 billion, up ¥23.1 billion year on year.
The Company’s policy in determining the dividend is to take into account the result for the fiscal year, the operating environment, and its financial position. Based on this policy, Mazda paid a dividend of 10 yen per share for FY March 2015. For FY March 2016, the Company plans to pay a dividend of 30 yen per share (comprised of an interim dividend of 15 yen and a year-end dividend of 15 yen). The Company will continue to strive to maintain a stable dividend with steady increase.

Management Conditions

(consolidated /billion yen)

  FY March 2013 FY March 2014 FY March 2015
Net sales 2,205.3 2,692.2 3,033.9
Operating income 53.9 182.1 202.9
Net income 34.3 135.7 158.8
Capital investment 77.2 133.2 131.0
R&D costs 89.9 99.4 108.4
Total assets 1,978.6 2,246.0 2,473.3
Equity 513.2 660.7 869.6

(Consolidated; thousand units)

  FY March 2013 FY March 2014 FY March 2015
Total 1,235 1,331 1,397
Global sales volume Japan 216 244 225
North America 372 391 425
Europe 172 207 229
China 175 196 215
Others 300 293 303

Outlook for Fiscal Year Ended March 31, 2016 and the Structural Reform Plan

In FY March 2016, the Company will continue to implement the major initiatives of the Structural Reform Plan to further enhance brand value.
In terms of products, the Company commenced sales of the new Roadster/MX-5, the sixth new-generation product with SKYACTIV TECHNOLOGY, with globally starting in May 2015. The new Demio/Mazda2, and updated CX-5 and Atenza/Mazda6 will contribute to the sales volume increase throughout the FY March 2016. Consecutively with the globally launching new CX-3, and the new Roadster/MX-5, and the new CX-9 to be launched in FY March 2016, the Company expects that SKYACTIV-equipped vehicles will account for over 85% of unit sales.
In response to the growing demand for SKYACTIV-equipped vehicles, which are steadily sold globally, the Company plans to increase the production volume at the plant in Mexico to 230 thousand units. The Company will start production of a compact car for Toyota at the plant in Mexico , and an open-top two-seater sports car for Fiat Chrysler at its Hiroshima Plant in Hiroshima Japan.
In view of these initiatives, the Company is projecting a 6.6% increase in global sales volume, to 1.49 million units. The Company’s financial forecasts are net sales of 3,250.0 billion yen (up 216.1 billion yen), operating income of 210.0 billion yen (up 7.1 billion yen), and net income of 140.0 billion yen (down 18.8 billion yen).

Structural Reform Stage 2

In order to address the major changes in the business environment that have occurred since the development of the Structural Reform Plan, Mazda formulated the Structural Reform Stage 2, a new mid-term business plan for FY March 2017 through FY March 2019, to achieve further qualitative growth in the future. In addition to raising the key initiatives of the Structural Reform Plan to a higher level, strengthening the business foundation, further enhancing brand value and building a solid financial base, Mazda will work to improve shareholder returns steadily.
The projected financial indicators for FY March 2019, the plan’s final year, are as follows (foreign exchange rate assumptions:120 yen/USD, 130 yen/euro): 1.65 million units for global sales volume, with an operating income ratio of 7% or more, equity ratio of 45% or more, and dividend payout ratio of 20% or more. Along with the reinforcement of its financial base, the Company will work to improve shareholder returns steadily.

Structural Reform Stage 2

(Note 1) GEN1: SKYACTIV Generation 1, GEN2: SKYACTIV Generation 2
(Note 2) Decisions for further growth under the next mid-term plan (from the March 2020 fiscal year) that will follow Structural Reform Stage 2 will be made during the period covered by Structural Reform Stage 2, based on changes in the business environment.

Structural Reform Stage 2

1. Product and R&D (Research and Development)
Mazda will introduce five models—four new models and one derivative model—that offer driving pleasure and outstanding environmental and safety performance.
The Company will realize optimal common architecture through global integrated planning that encompasses development, manufacturing, and sourcing.

Continuous evolution of SKYACTIV products

  • ■ Introduce products that deliver on Mazda’s brand promise through coherent technological advancements and evolution of KODO design
  • ■ Enhance showroom lineup with models featuring the latest technologies and design Realize optimal common architecture
  • ■ Technology development for next generation products to focus on environmental and safety measures
  • ■ Aim to improve global fuel efficiency by 50% over 2008 levels by 2020

Plan to raise average fuel economy globally

Plan to raise average fuel economy globally

2. Strengthening Global Sales and Networks
Mazda will reinforce sales with a full lineup of SKYACTIV products.
The Company will drive reforms at the sales frontline to instill sales strategy that enhances brand value.

Reinforce sales with full lineup of SKYACTIV products

  • ■ Realize brand showroom
  • ■ Greater emphasis on crossover vehicles
  • ■ Emphasize advanced functions such as proactive safety, i-ACTIV AWD and Mazda Connect

Drive reforms at sales frontline and reinforce sales initiatives

  • ■ Realize “right-price” sales (Reduce incentives, improve net revenue, improve residual values)
  • ■ Promote communication strategies that stress brand value
  • ■ Roll out new-generation showrooms, expand sales capacity, and reinforce marketing in metropolitan areas
  • ■ Reform operations to place more emphasis on customer care and improve the customer’s brand experience
  • ■ Implement sales staff training and driving academy

* New-generation all-wheel-drive system with front wheel slip warning detection system, which is incorporated in CX-5, Atenza/ Mazda6, new Axela/ Mazda3, new Demio/ Mazda2, and new CX-3.

Brand showroom
(Kanto Mazda's Meguro Himonya)

Brand showroom (Kanto Mazda's Meguro Himonya)

3 Global Production, Cost Improvements
Mazda will accelerate cost improvements through global deployment of Monotsukuri Innovation.
The Company will pursue maximum production efficiency and full capacity utilization at major production sites to support growth.
  • ■ Realize high quality, efficient and flexible production by adopting Monotsukuri Innovations developed in Japan to every production site, including the global supply chain
  • ■ Raise production efficiency at Mexico Plant to the level of Japanese plants
  • ■ Reduce R&D and production costs and further enhance quality by expanding the scope of model-based engineering, including full-scale implementation in the area of manufacturing

Global production volume

Global production volume

4. Reinforce Financial Structure and Shareholders Returns
Mazda will establish a robust financial structure for stable and sustainable growth.
Over the medium- and long-term, the Company will increase total payout ratio and improve capital efficiency.

To establish a robust financial structure for stable and sustainable growth, Mazda will pursue the reduction of net interest-bearing debt and enhancement of equity. The Company maintains both future growth and discipline for capital investment and R&D expenditures, considering the effective use of management resources and the improvement of capital efficiency.
Mazda intend to maintain return on equity (ROE) at a level between 13% and 15% during the period covered by Structural Reform Stage 2. The Company will continue working to raise total return ratio and capital efficiency in mid- and long-term perspective.