Mazda Should Sell Some Assets, Analysts Say
As its revenues continue to plummet, the least-profitable Japanese automaker holds on to ownership stakes in baseball, soccer teams.
By Claire_Martin Apr 11, 2012 10:47AM
Of any Japanese automaker, Mazda has fallen the hardest in the wake of the recession. It now faces its biggest annual loss in 11 years after having posted record profits just four years ago. When the company unloaded $1.8 billion in new stock earlier this year, questions began swirling about whether it would also dump the professional baseball and soccer teams it owns, along with other assets. But instead, Mazda followed up the sale by announcing plans to sponsor this summer's Japanese all-star game. “This comes at the worst time,” Japanese mutual fund manager Kazuyuki Terao told Bloomberg. “People might think if they don’t cut spending on baseball, they may also not worry about other expenses.”
There are compelling reasons for Mazda to unload assets, which include $5 billion in land holdings and a hospital in Hiroshima, where the company is based. Revenue fell 12 percent over the past year, and Mazda's stock took the biggest hit of all the Japanese automakers after the Fukushima earthquake, dropping 42 percent. Also, the fallout from Ford parting ways with Mazda in 2010, after a decades-long partnership, leaves Mazda with production facilities primarily in Japan, where the rising yen has increased the cost of producing cars.
The company is planning to scale back on some expenses; it's offering buyouts to U.S. employees and will be making 71 percent fewer new hires this year. But that may not be enough. Some industry analysts think Mazda's stake in the Hiroshima Carp baseball team needs to go. “Given the situation, Mazda may need to consider selling the Carp,” Kenichi Hirano, a Tokyo-based strategist with Tachibana Securities, told Bloomberg. “They should be reviewing what assets they can sell.”
But that doesn't appear to be a priority as of now, according to various quotes in the Bloomberg report: “We started to run the hospital and investing in baseball, soccer teams to make contributions to the local community,” Mazda spokeswoman Kozue Nitta said. “We have many reasons to hold on to each asset.”
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