Nissan expects profit to drop for fiscal year 2017
TOKYO: Nissan Motor Co Ltd said yesterday that it projected a 7.7% drop in group operating profit to 685 billion yen ($6 billion) for fiscal year 2017 through next March due to the yen’s strength and higher raw material costs.
Japan’s second-largest automaker by volume expects a group net profit of 535 billion yen, down 19.4% from the year ended in March this year, on sales of 11.8 trillion yen, up 0.7%.
Nissan reported a record group net profit of 663.50 billion yen for fiscal 2016, up 26.7% from the previous year when the company also posted a record net profit.
Group operating profit dropped 6.4% to 742.23 billion yen in the just-ended year, as sales declined 3.9% to 11.72 trillion yen.
“Despite the tough currency environment, we were able to achieve (good) results,” Nissan president Hiroto Saikawa said at a press conference at the company’s headquarters in Yokohama.
The company expects the US dollar will average 108 yen in fiscal 2017 versus 108.3 yen in fiscal 2016, with the euro around 118 yen against 118.7 yen the previous year.
In the fiscal year ended March 31, Nissan sold 5.63 million vehicles globally, up 3.7% from the previous year, on strong overseas sales.
Nissan sold 1.58 million vehicles in the United States, up 4.2%, while sales in Japan fell 2.6% to 557,000 vehicles.
Saikawa said that the automaker has taken a more conservative stance on its US sales for fiscal 2017 as demand may have peaked in the world’s second-biggest auto market after China.
“But I still think fundamentals in the United States are solid ... we hope to continue to raise profitability,” he said.
Nissan expects to sell 5.83 million vehicles worldwide in fiscal 2017, up 3.6%. US sales are seen rising 1.2% to 1.6 million vehicles.
Saikawa said he welcomed the victory of Emmanuel Macron in France’s presidential election.
“It was a good result in terms of the stability of the European Union and stability and growth of the French economy,” he said
Nissan is a key partner of Renault SA of France under their capital alliance formed in 1999.
“Two years ago, I had a chance to have deep discussions with the new president and his team ... (Macron) deeply understands the value of the (Renault-Nissan) alliance so as he has become the president it will be easier for us to work,” Saikawa said.
In 2015, friction between the FrancoJapanese alliance and the French government arose, as Nissan tried to block the government from exerting influence on the alliance through its position as the top shareholder in Renault, which is the biggest shareholder in its Japanese peer.
The French government was set to increase its voting rights in Renault as a result of a law passed the year before enabling the doubling of the voting rights of investors owning shares for at least two years unless rejected by two-thirds of shareholders.
Macron was the economy and industry minister at the time and had criticised Renault chief executive Carlos Ghosn for his high remuneration.
The dispute was eventually settled after the French government agreed not to interfere in the Japanese automaker’s governance.