Mazda Reports Strong First-Half Results,
Increases Full-Year Outlook

- Management team commits to mid-term plan; will maintain ‘Mazda Momentum’ -

Mazda Motor Corporation today reported a strong profit increase for the first half of FY2004. The results have put the company well on course to achieve its best ever, full-year operating profit.

In the first half of FY2004, which ended September 30, 2004, Mazda posted an increase in all profit levels. Consolidated revenue for the period was 1,320.6 billion yen, up 9 percent over the same period of the previous year. Operating profit increased by 53 percent to 43.5 billion yen, with net income increasing by 68 percent from year-ago levels to 18.7 billion yen.

These profit gains were largely supported by increased revenue through continued sales strength in Europe, stronger sales of new products such as Mazda3/Axela and the company’s continued efforts with its Achieve Best Cost (ABC) initiative to drive down cost.

Mazda Representative Director and Chief Financial Officer Gideon Wolthers said, “I am pleased once again to provide a favorable financial report. Good momentum in the first half has given us the confidence to raise our full-year outlook. We are now on course to achieve an all-time record of 78 billion yen in operating profit. And it is worth noting the last time our operating results were close to that level, the year was 1985 and the yen stood at 245 to the dollar.”

Financial results for the first half of FY2004
Consolidated revenue in the first half was 1,320.6 billion yen, an increase of 111.1 billion yen over the first half of FY2003. Operating profit was 43.5 billion yen, a year-on-year increase of 15.1 billion yen. Ordinary profit was 36.9 billion yen, up 17.9 billion yen from a year ago, while net income increased by 7.5 billion yen to 18.7 billion yen.

Consolidated cash flow was negative 14 billion yen. Net debt increased by 5.2 billion yen to 363.3 billon yen compared to the end of FY2003, and the debt-to-equity ratio improved by 10 percentage points to 151 percent.

Financial projection for FY2004
Mazda also announced an increase to its full-year projections for FY2004--including a projected operating profit of 78 billion yen, which would represent an all-time record. All FY2004 profit levels are projected to be up year-on-year.

Full-year sales revenues are projected to be 2,710 billion yen, an increase of 5 percent over year-earlier levels, excluding the impact resulting from the fiscal year change at overseas operations in FY2003. Operating profit is projected to be 78 billion yen, an increase of 7.8 billion yen over FY2003 and an increase of 8 billion yen from earlier projections. Full-year projections for ordinary profit and net income have also been increased.

Mazda Momentum
In announcing its first-half results and raising FY2004 financial projections, Mazda management also committed itself to sustaining what has been dubbed, “Mazda Momentum.” With a vision of where Mazda wants to be in ten years' time, the company developed Mazda Momentum--a new mid-term business plan. Under the plan, Mazda will build a foundation for full-scale growth while, at the same time, sustaining its present, positive sales and profit momentum.

“Mazda Momentum is the theme my management team adopted as it worked to create a new plan to focus the company’s efforts around a common goal of maintaining our hard earned momentum,” said Hisakazu Imaki, president and CEO of Mazda Motor Corporation.

“We have made solid progress, but I am not yet totally satisfied. We must further accelerate our momentum. This period of time will be the most critical for us. We have a vision of where we want to be in ten years’ time, but for now we must deliver strong results, strengthen our position in key markets, invest aggressively in R&D, find more global efficiencies and leverage our human resources,” Imaki added.

Mazda Momentum includes key, mid-term corporate targets for FY2006. One goal is a new, record level of operating profit in excess of 100 billion yen. This operating profit is expected to be achieved through wholesales of 1.25 million units, up 120,000 units from projected FY2004 levels. Mazda is also targeting to reduce its debt-to-equity ratio from a present level of 151 percent to below 100 percent by FY2006.

Plans are also in place to increase R&D spending by 30 percent by FY2006 from present levels. The pace of new product launches will also be increased, with 16 important new vehicle launches planned in key global markets by the end of calendar year 2006.

During Mazda Momentum, global efficiencies and synergies will be strengthened in the areas of R&D, procurement, production and logistics. People development will also continue, following the good progress made during the past four years. Mazda’s Business Leader Development program (MBLD) will continue to be an important tool to move the company forward.

“Investing in the future while simultaneously focusing on sustaining our momentum is the task my management team faces,” said Imaki. “I believe this will be a very challenging period for Mazda and a period of fundamental change. But we will build a solid foundation and deliver sustained momentum. A commitment to these objectives and disciplined execution will be the cornerstones of Mazda Momentum.”

Disclaimer
The projections for FY2004 and future strategies mentioned in this press release are based on various uncertainties including conditions of the world economy in the future, the trend of the automotive industry and the risk of exchange rate fluctuations. Note that neither Mazda nor any third party providing information shall be responsible for any damage an individual may suffer due to investment in Mazda based on the information contained in this press release.

Go to "Investor Relations" at Mazda Official Website for additional information.