Nissan raises profit forecast on forex windfalls, cost cuts

TOKYO: Nissan Motor Co said yesterday that it had raised its full-year net profit forecast to $3.5 billion, thanks to cost cutting efforts and a cheaper yen, while booming US and European sales offset a plunge in Japan caused by last April’s sales tax hike.

Japan’s second-biggest carmaker said it expected to make a profit of 420 billion yen ($3.5 billion) in the year to March 31, up from from an earlier forecast of 405 billion yen.

Nissan’s announcement came as it said net profit for the nine months to December rose 23.6 percent year on year to 338.8 billion yen.

Operating profit for the term jumped 39.0% to 417.9 billion yen on sales of 8.09 trillion yen, up 11.1% from the previous year.

For the year to March, the company is expecting to earn an operating profit of 570 billion yen on sales of 11.15 trillion yen, also marking increases from earlier projections for 535 billion yen and 10.80 trillion yen respectively.

Solid US sales, cost-cutting programmes and favourable currency movements contributed to the robust earnings, said Nissan president and chief executive officer Carlos Ghosn.

“Nissan delivered solid financial results in the first nine months of the fiscal year, reflecting rising US sales of our latest models and a normalising yen-dollar exchange rate,” he said in a statement.

“We anticipate good full-year results as our product offensive and positive momentum in North America and Western Europe offsets volatility in other markets.

“Given these trends, along with the continuing impact of currency movements and cost controls, we are today revising upward our full-year financial forecast.”

For the nine-month period, Nissan said the popularity of key models such as the Altima and Rogue in the all-important US market had helped the bottom line.

Retail sales volumes in the US rose 10.9% to 1.03 million units, improving the company’s market share to 8.1% from 7.8% in the same period a year earlier.

For the third quarter, the growth in the US market and a cheaper yen “outweighed the negative effects of slowing demand in some markets, notably China and Japan as well as the continuing political and economic situations in Russia,” corporate vice president Joji Tagawa told a press briefing at Nissan global headquarters in Yokohama.

Nissan also reported a 13.4% rise in European unit sales, while the figure in China rose 5.2%.

But unit sales dropped 10.5% in Japan, where the market was hit by a consumption tax hike in April and weak consumer confidence, Nissan said.

Japanese automakers have struggled to deal with prolonged effects of the tax hike from five to eight percent, that pushed many motorists to rush to buy vehicles before April, causing a sudden and prolonged drop of auto sales in their home market.

For the year to March, Nissan revised down its unit sales forecast to 5.30 million from an earlier projection for 5.45 million, reflecting softness seen in Japan, China and Europe.

Still, the revised unit sales expectation marks an increase of 2.2% from the unit sales achieved last fiscal year.

Nissan’s performance came after its domestic rival and the world’s biggest automaker Toyota Motor Corp also raised its full-year net profit forecast to a record $18.1 billion, also citing a weak yen, cost cuts and strong demand in the key North American market.

But other main rival Honda Motor Co cut its full-year net profit forecast to $4.6 billion, as it grapples with soaring recall costs, including from an exploding air bag crisis involving parts produced by Takata Corp.