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Table of contents
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Page 1
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Page 2
... Market Japan North America Europe China Other Markets Global Network
FOUNDATIONS UNDERPINNING SUSTAINABLE GROWTH
28 30
72 73
Mazda CSR Business Management System Corporate Governance Internal Controls Risk Management Compliance Directors, Audit & Supervisory Board Members, and Executive Officers...
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Page 3
... REPORT 2016
Corporate Profile Since its establishment in 1920, Mazda has continued to be an automobile manufacturer that embodies the spirit of "never stop challenging." In 2007, Mazda formulated "Sustainable Zoom-Zoom," a long-term vision for technological development that declares the Company...
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Page 4
... of brand value through qualitative growth in all areas of our business, including product development and manufacturing quality, sales quality, and financial soundness. Our management targets for the March 2019 fiscal year, the final year under the plan, are for global sales volume of 1.65...
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Page 5
..., including the 2015-2016 Car of the Year Japan and the 2016 World Car of the Year, making us very happy to have so many people recognize the type of vehicle engineering for which we aim. We also unveiled the three-row crossover SUV Mazda CX-9, featuring a newly developed 2.5-liter direct-injection...
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Page 6
... lineup of crossover models, which are registering growth in demand globally, to step up sales volume and raise profitability. Our technological development
4
Contents
Message from Management
Review of Operations
Drivers of Value Creation
Foundations Underpinning Sustainable Growth
Financial...
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Page 7
...long-term vision for technology development, which has a basic policy of providing all
Structural reform as a way toward qualitative business growth and improved brand value
Product and R&D Brand and Sales Global production Strengthen financial structure
• Continuous evolution of new-generation...
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Page 8
... electric vehicles to meet structural requirements, including ZEV* regulations in the United States, and we are moving forward with the development of electric vehicle technology. In our development, we will work to reduce costs and ensure quality by cooperating with business partners and research...
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Page 9
... investment and investment in research and development?
During the period covered by Structural Reform Stage 2, we will maximize manufacturing efficiency at our main production centers to achieve a global sales volume of 1.65 million units without constructing new factories. In addition, to meet...
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Page 10
... developed in Japan will be deployed around the globe Maximize production efficiency at key sites to support volume growth to 1.65 million units without building new plants • Global swing production enables plants to supplement each other • Improve production flexibility between passenger car...
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Page 11
...: J Japan N North America E Europe C China O Other markets *1 Global sales volume is for the March 2016 fiscal year; sales markets and production bases are as of March 31, 2016. *2 Vehicle specifications differ by market.
9
Contents
Message from Management
Review of Operations
Drivers of Value...
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Page 12
... valued and won the 2015-2016 Car of the Year award as well as the 2016 World Car of the Year and World Car Design of the Year awards at the World Car Awards. In addition, the CX-3, introduced in February 2015, resulted in steady sales as a model chosen by customers who have never
2013
2014
2015...
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Page 13
..., the CX-3 contributed to the increase in sales volume. The U.S. Environmental Protection Agency (EPA)'s pight-Duty
372 99 1.9 273
2013
391 107 1.8 284
2014
425 119 1.8 306
2015
438 132 1.7 306
449 124
FOCUS
Working to Enhance Brand Value
325
2016
2017
(Forecast)
Years ended March 31...
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Page 14
... a major drop in total demand, and as a result of price increases in response to the ruble's depreciation, sales volume decreased 47%, to 25,000 units. Sales of the CX-3, which began full scale in June 2015, sur-
2013
2014
2015
2016
2017 Years ended (Forecast) March 31
passed our initial first...
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Page 15
...) Market Share (%)
Other Markets
Sales Volume
â- Sales Volume (Thousands of units) Market Share (%)
175 0.9
196
215
235
238 300 293 303
372
370
0.9
0.9
0.9
New CX-4
2013
2014
2015
2016
2017
(Forecast)
Years ended March 31
CX-5
2013
2014
2015
2016
2017
(Forecast)
Years ended...
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Page 16
MAZDA ANNUAL REPORT 2016
Global Network
25
Changan Mazda Automobile
8
Hiroshima Plant
9
Hofu Plant
Location: Nanjing, China Production capacity: 220,000 units per year Models in production: Mazda3, CX-5
22 21 19 17 20
Location: Aki-gun, Hiroshima, Japan Production capacity: 515,000 units ...
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Page 17
...Support Center FAW Car*
1
24
Production facilities
25 26
Changan Mazda Automobile (Nanjing Company) Changan Ford Mazda Engine FAW Mazda Motor Sales Changan Mazda Automobile Sales
2012 2013 2014 2015 2016
4
R&D
5 6 7 8
847
879
973
919
989
27
Distributors
28
(Years ended March 31)
Sales...
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Page 18
... ANNUAL REPORT 2016
Long-Term Vision for Technology Development
"Sustainable Zoom-Zoom" Provide All Customers Who Purchase Mazda Vehicles with Driving Pleasure as Well as Outstanding Environmental and Safety Performance
In March 2007, Mazda announced its long-term vision for technology development...
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Page 19
MAZDA ANNUAL REPORT 2016
SKYACTIV TECHNOLOGY
Mazda has made dramatic improvements to the base technologies for a car's basic performance-including to the engine, transmission, body, and chassis.
SKYACTIV-G
A new-generation highly efficient directinjection gasoline engine that achieves the world's ...
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Page 20
..., a series of new-generation vehicle motion control technologies. The Company plans to gradually introduce GVC in all newgeneration models, starting with the updated Mazda3, which went on sale in Japan in July 2016. GVC was developed based on Mazda's human-centered development philosophy and the...
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Page 21
...-engine, rear-wheel drive sports car with KODO design-based proportions only Mazda could envision, the model is powered by the next-generation SKYACTIV-R rotary engine and represents the Company's vision of the future.
19
Contents
Message from Management
Review of Operations
Drivers of Value...
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Page 22
...glÂ-Â"h
Please refer to Mazda's website for detailed explanations of each technology:
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20
Contents
Message from Management
Review of Operations
Drivers of Value Creation
F oundations Underpinning...
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Page 23
... has been moved forward on all new and redesigned models since the CX-5, a change that reflects Mazda's commitment to designing its vehicles around the human beings that use them. The adjustment range for the seats and steering wheel is determined in order to have as many drivers as possible...
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Page 24
...investment.
Monotsukuri Innovation enabled Mazda to make more competitive products while improving costs
- Design intent faithfully reproduces in mass-production vehicles - Development and application of designer colors Soul Red and Machine Gray contribute to enhancing brand value
CHECK
New Design...
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Page 25
MAZDA ANNUAL REPORT 2016
Co-Creation and Problem-Solving in the Development of the Mazda MX-5
Mazda's globally recognized SKYACTIV TECHNOLOGY and new-generation vehicles were born from the Companywide process innovation program Monotsukuri Innovation to achieve the Sustainable Zoom-Zoom long-term ...
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Page 26
MAZDA ANNUAL REPORT 2016
Design Divisions
Manufacturing Divisions
Using KODO Design to Make Products More pike "Works of Art" Co-Creation by Design and Manufacturing Divisions
The MX-5's beautiful design has led to the model receiving numerous awards for superior automobile design. In this ...
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Page 27
MAZDA ANNUAL REPORT 2016
Design Divisions
Manufacturing Divisions
technology was created to achieve a three-dimensional form befitting a sports car. One of the major changes made on the manufacturing line was to alter the form of procurement for aluminum from the previous sheets to coils. Also, ...
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Page 28
... development engineer
Kouji Furutani
Die-cast process production technology engineer
The new MX-5 was designed with the frame as a package around the occupants to give a strong sense of oneness with the car and the driver a feeling that he or she is controlling the car by will alone. To position...
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Page 29
... made a number of proposals based on Mazda's proprietary die cast technology.*3 They commented: "Monotsukuri Innovation aims to offer customers more value and reduce costs at the same time. To
Uniform thickness (4.5mm)
Cross-section of the manual transmission case in the previous model, which used...
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Page 30
...
Mazda employees
Business partners
Review and Identification of Key Areas of CSR Initiatives (Materiality)
Customer Satisfaction
CSR Strategy Core Team Company Departments and Sections Quality Safety Environment Respect for People Social Contributions
Meetings: Held as required Members: Working...
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Page 31
... Investment Register since October 1, 2013. Forum ETHIBEp is a Belgium-based non-profit organization that promotes socially responsible investment (SRI) and CSR in Europe. • Inclusion in the MSCI Global Sustainability Index since June 1, 2015. An SRI index developed by MSCI (Morgan Stanley Capital...
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Page 32
MAZDA ANNUAL REPORT 2016
Business Management System
Corporate Governance
Mazda is enhancing its corporate governance by working to increase management transparency and expedite decision making. The Company respects the intent of the Corporate Governance Code set by Tokyo Stock Exchange and shall ...
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Page 33
MAZDA ANNUAL REPORT 2016
Business Management System
1
Board of Directors
4
Internal Auditing Departments
6
Mazda's Board of Directors decides on the execution of important Company operations and oversees the execution of operations by individual directors. The Board is made up of 10 directors...
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Page 34
MAZDA ANNUAL REPORT 2016
Business Management System
Efforts to Increase Transparency and Fairness of the Process for Nominating and Appointing Directors
In order to enhance the transparency, fairness, and objectivity of the process for nominating and appointing officers (candidates for director, ...
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Page 35
... 2016 fiscal year
Category Directors Audit & Supervisory Board members Total (of which, outside auditors) People 10 5 15 (6) Amount (millions of yen) 448 109 557 (65)
Basic Policy on Corporate Audit Compensation
The corporate audit compensation paid to the Company's certified public accountants...
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Page 36
... as Mazda's related departments and the auditing department, participate in each company's Audit Committee meetings and exchange opinions. Mazda's executive officers and full-time Audit & Supervisory Board members also attend the meetings at the Group companies in Europe, North America and Australia...
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Page 37
... website prior to mailing. English: http://www.mazda.com/en/investors/stockinfo/meeting/ Japanese: http://www.mazda.com/ja/investors/stockinfo/meeting/
Basic Strategy for Capital Policy
In order to enhance corporate value over the medium and long terms and build a solid financial foundation...
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Page 38
... March 2016 fiscal year, Mazda and its Group companies engaged in efforts to visualize the status of establishing systems to manage risks. The position of the Risk & Compliance Committee was
Risk Management Structure in Normal Times
Representative Director and President Promotion Executive Officer...
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Page 39
... and chaired by an executive officer responsible for intellectual property issues. Also, the invention incentive system increases motivation for inventions among employees working at the forefront of research and development. For its Group companies in Japan and overseas, Mazda supports them in...
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Page 40
...2015 Apr. 2016 Jun. 2016 Joined Toyo Kogyo Co., ptd. (present Mazda Motor Corporation) Vice President, Mazda Motor Europe GmbH General Manager, Product Planning & Business Strategy Div. Executive Officer Managing Executive Officer Managing Executive Officer; President, Mazda Engineering & Technology...
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Page 41
..., Brand Enhancement, Production and Business pogistics
Yasuhiro Aoyama
Global Sales Coordination; In charge of Brand Enhancement, Global Marketing and Customer Service
Tetsuya Fujimoto
In charge of Financial Services; Assistant to the Officer in charge of Corporate Planning
Kiyoshi Fujiwara...
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Page 42
...2012
2013
2014
2015
2016
Years ended March 31
2012
2013
2014
2015
2016
Years ended March 31
2012
2013
2012
2013
2014
2015
2016
Years ended March 31
Global Sales Volume
SKYACTIV Ratio
Operating Income (poss) Operating Income Ratio
Net Income Attributable to Owners of the Parent...
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Page 43
... of Consolidated Financial Statements
2016 2015 2014 2013 2012
Mazda Motor Corporation and Consolidated Subsidiaries Years ended March 31
Millions of yen 2011
2010
2009
2008
2007
2006
Thousands of U.S. dollars*1 2016
For the year*2: Net sales Domestic Overseas North America Europe Other...
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Page 44
...617.3
Foreign exchange
(42.4) (38.7) (107.7) 2012 2013 2014 2015 2016
Years ended March 31
560.2 2012
588.0 2013
655.7 2014 2015
617.4 2016
660.9
YoY +23.9 2015 â- Improvement â- Deterioration 2016
Years ended March 31
â- Japan â- North America â- Europe â- China â- Other markets...
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Page 45
....4
2016
2,815.7 1,440.4 690.0 595.0
2012
(18.4) (40.3) 5.6 10.1 4.3 (38.7)
2013
108.4 (48.9) 3.1 16.8 (25.5) 53.9
2014
173.5 1.3 8.5 5.8 (7.0) 182.1
2015
142.4 37.9 14.9 13.5 (5.8) 202.9
Japan North America Europe Other markets Adjustment Consolidated
Japan North America Europe Other markets...
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Page 46
...-end dividend of ¥20 per share. We intend to use internal reserves for research and development and capital investment for future growth.
Financial Forecast
(Billions of yen) 2017 (Forecast)
Forecast for Global Sales Volume
(Thousands of units)
(Years ended March 31)
(Years ended March 31)
2016...
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Page 47
... boost its competitiveness in product development, manufacturing, sales, and other areas. However, the Group's business results and ï¬nancial position could be affected in the event that it fails to launch appealing products at opportune times, due to a failure to accurately ascertain market trends...
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Page 48
... affect the Group's business results and ï¬nancial position. 7. International Business Activities In addition to Japan, the Group sells its products and carries out business activities in markets in all parts of the world, including the United States and Europe, as well as developing and emerging...
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Page 49
MAZDA ANNUAL REPORT 2016
Business Risks
11. Dependence on Information Technology In the course of various business activities such as development, production, and sales of products, the Group utilizes information technology, networks, and systems. The Group's products are also equipped with these ...
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Page 50
MAZDA ANNUAL REPORT 2016
Consolidated Balance Sheets
Mazda Motor Corporation and Consolidated Subsidiaries March 31, 2016 and 2015
Millions of yen ASSETS 2016 2015
Thousands of U.S. dollars (Note 1) 2016 LIABILITIES AND NET ASSETS 2016
Millions of yen 2015
Thousands of U.S. dollars (Note 1) ...
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Page 51
...Millions of yen 2016 2015 Thousands of U.S. dollars (Note 1) 2016
Mazda Motor Corporation and Consolidated Subsidiaries Years ended March 31, 2016 and 2015
Consolidated Statements of Comprehensive Income
Millions of yen 2016 2015 Thousands of U.S. dollars (Note 1) 2016
Net sales Cost and expenses...
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Page 52
... Net Assets
Mazda Motor Corporation and Consolidated Subsidiaries Years ended March 31, 2016 and 2015
April 1, 2014
Cumulative effects of changes in accounting policies
Common stock ¥258,957
- 258,957 258,957
Millions of yen Net assets attributable to owners of the parent Capital and retained...
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Page 53
MAZDA ANNUAL REPORT 2016
Consolidated Statements of Cash Flows
Mazda Motor Corporation and Consolidated Subsidiaries Years ended March 31, 2016 and 2015
Millions of yen 2016 2015
Thousands of U.S. dollars (Note 1) 2016 2016
Millions of yen 2015
Thousands of U.S. dollars (Note 1) 2016
Cash ...
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Page 54
... FINANCIAL STATEMENTS
The accompanying consolidated financial statements of Mazda Motor Corporation (the "Company") and its consolidated subsidiaries (together, the "Group") have been prepared in accordance with the provisions set forth in the Financial Instruments and Exchange Law of Japan...
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Page 55
... ANNUAL REPORT 2016
Notes to Consolidated Financial Statements
If the fair market value of equity securities issued by unconsolidated subsidiaries and affiliated companies not on the equity method and available-for-sale securities declines significantly, such securities are stated at fair market...
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Page 56
...be realized. The Company and its wholly owned domestic subsidiaries elect to file a consolidated corporate tax return as a consolidation group.
For the years ended March 31, 2016 and 2015, only information on net income per share of common stock is provided without information on diluted net income...
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Page 57
... net position. Short-term investments consist mainly of certificates of deposit and other highly-liquid shortterm investments. Investment securities consist mainly of stocks of our business partner companies and are subject to the risk of market price fluctuations and other factors. Long-term loans...
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Page 58
...liquidity risks of the Group are managed mainly through the preparation and update of the cash schedule by the Treasury Department.
Fair values of financial instruments
As of March 31, 2016 and 2015, the carrying values on the consolidated balance sheet, the fair values, and the differences between...
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Page 59
...
For the schedule of repayment of long-term debt after the consolidated balance sheet date, refer to Note 9, "Short-Term Debt and Long-Term Debt".
57
Contents
Message from Management
Review of Operations
Drivers of Value Creation
Foundations Underpinning Sustainable Growth
Financial Section
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Page 60
MAZDA ANNUAL REPORT 2016
Notes to Consolidated Financial Statements
5
SECURITIES
The Group had no trading or held-to-maturity debt securities at March 31, 2016 and 2015. Available-for-sale securities with market values as of March 31, 2016 and 2015 were as follows:
Millions of yen As of March 31...
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Page 61
MAZDA ANNUAL REPORT 2016
Notes to Consolidated Financial Statements
9
SHORT-TERM DEBT AND LONG-TERM DEBT
Short-term debt as of March 31, 2016 and 2015 consisted of loans, principally from banks with interest averaging 1.38% and 1.42% for the respective years. Long-term debt as of March 31, 2016 ...
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Page 62
... for the years ended March 31, 2016 and 2015 were as follows:
Millions of yen For the years ended March 31 2016 2015 Thousands of U.S. dollars 2016
Bonds Equity securities General accounts of the life insurance companies Other Total
43% 25% 17% 15% 100%
41% 29% 17% 13% 100%
Service cost Interest...
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Page 63
... required to be designated as common stock. However, a company may, by a resolution of the Board of Directors, designate an amount not exceeding one half of the price of the new shares as additional paid-in capital, which is included in capital surplus. Under the Corporate Law ("the Law"), in cases...
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Page 64
...062,097
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING TRANSACTIONS
The net deferred tax assets are included in the following accounts in the consolidated balance sheets:
Millions of yen As of March 31 2016 2015 Thousands of U.S. dollars 2016
Current assets-Deferred tax assets Investments and other...
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Page 65
... check within the Treasury Department, and is audited periodically by the Global Auditing Department. Derivative transactions are reported, upon execution, to the Company's Financial Officer, Financial Services Division General Manager, and Treasury Department General Manager. The consolidated...
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Page 66
... the Company consists of regional segments based on a system of managing production and sale. As such, Japan, North America, Europe, and Other areas are designated as four reportable segments.
As of March 31, 2015
Contract amount
Thereof due after 1 year
Estimated fair value
Interest rate swaps...
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Page 67
... Statements
Net sales, income or loss, and assets by reportable segments
Net sales, income or loss, and assets by reportable segments for the years ended March 31, 2016 and 2015 were as follows:
Millions of yen Reportable segments For the year ended March 31, 2016 Japan North America Europe...
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Page 68
MAZDA ANNUAL REPORT 2016
Notes to Consolidated Financial Statements
Millions of yen Reportable segments For the year ended March 31, 2015 Japan North America Europe Other areas Total Adjustment (*1)
Consolidated (*2)
Net sales: Outside customers Inter-segment Total Segment income Segment assets ...
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Page 69
MAZDA ANNUAL REPORT 2016
Notes to Consolidated Financial Statements
19
SIGNIFICANT SUBSEQUENT EVENTS
On July 20, 2016, the Company implemented the funding by new subordinated loan (the "Subordinated Loan") and made an early repayment of the existing subordinated loan (the "Existing Subordinated ...
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Page 70
MAZDA ANNUAL REPORT 2016
Notes to Consolidated Financial Statements
(ix) Equity credit attributes of the Subordinated Loan evaluated by a Ratings Institution Class 3 / 50% (Rating and Investment Information, Inc.) (x) Investors (lenders) participating in the Subordinated Loan Sumitomo Mitsui ...
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Page 71
... of Mazda Motor Corporation and its consolidated subsidiaries as at March 31, 2016, and their financial performance and cash flows for the year then ended in accordance with accounting principles generally accepted in Japan.
Management's Responsibility for the Consolidated Financial Statements...
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Page 72
... and manual transmissions for vehicles
http://www.mazda.com/en/csr/download/
* To be published at the end of September 2016
PLEASE VISIT OUR OFFICIAL WEBSITE
Investor Relations
Main business lines: Research and development sites:
BREAKDOWN OF SHAREHOLDERS
Other Japanese corporations 7.8% 46...
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Page 73
... of a business partnership 2016. 3 All-new Mazda MX-5 wins both 2016 World Car of the Year and World Car Design of the Year
* paunching date is based on the Japanese market
PRODUCTS*
1931.10
Production of 3-wheel truck "Mazda-go DA model," Mazda's first automobile, begins
1960.5
Introduction of...
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Page 74
... vehicles is found to be defective. This is because the vehicle of an individual customer is not "one out of 100 vehicles" but rather the only one.
72
Contents
Message from Management
Review of Operations
Drivers of Value Creation
Foundations Underpinning Sustainable Growth
Financial Section
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Page 75
MAZDA ANNUAp REPORT 2016
Corporate Vision
We love cars and want people to enjoy fulfilling lives through cars. We envision cars existing sustainably with the earth and society, and we will continue to tackle challenges with creative ideas. 1. Brighten people's lives through car ownership. 2. Offer...
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Page 76