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Customers look at the racing car Nissan Deltawing for the Le Mans series at the showroom of Nissan Motor in Yokohama, south of Tokyo, yesterday.
TOKYO: Nissan’s heavy exposure to China and recession-hit Europe slammed its earnings with the Japanese carmaker saying yesterday that its net profit in the three months to December plunged 34.6 percent.
But the company, part-owned by France’s Renault, added that a weakening yen, cost cutting and a planned slate of new models helped it keep its previous full-year earnings forecast unchanged.
Nissan Chief Executive Carlos Ghosn criticised his company’s quarterly results, saying they fell below expectations as the carmaker also reported that nine-month profit was down about 12 percent year-on-year.
The firm’s global vehicle sales slipped 3.8 percent in the quarter to 1.16 million units, hit by slumping demand in Europe and tough conditions in China, the world’s biggest vehicle market. “Nissan’s performance in the third quarter did not meet our expectations,” Ghosn said. “This was primarily the result of difficult operating conditions in Europe for the entire auto industry, in China for Japanese carmakers, and in the US for Nissan.”
Japan’s second-biggest carmaker is the most exposed to the China market among top domestic rivals Toyota and Honda, with its quarterly unit sales in the country down 15.6 percent.
Nissan’s rivals reported a jump in earnings last week, as the country’s carmakers cemented a recovery from Japan’s 2011 quake-tsunami disaster, although they have also been hurt by a Tokyo-Beijing diplomatic spat. The long-standing feud flared in September when Tokyo nationalised some of a tiny East China Sea archipelago that is also claimed by Beijing, setting off huge demonstrations across China and a consumer boycott of Japanese brands.
Japanese factories and businesses across China temporarily closed or scaled back operations over fears of being targeted by angry mobs. Ghosn had previously warned that Nissan would think twice about making new investments in China due to the row. It has several production plants there with a new factory in the northeastern city of Dalian planned for 2014.
A Nissan official said yesterday that the China market was “normalising”, echoing similar comments from the firm’s competitors. Japanese carmakers have also been hit by slumping demand in Europe, with Nissan’s unit sales falling 16.2 percent on the continent in the quarter. However, Toyota and Honda have said sales in the key North American market were improving, while Nissan’s fell 6.6 percent in the quarter.
Nissan said it earned 54.1bn yen ($582m) between October and December, down 34.6 percent from a year earlier, on sales of 2.21 trillion yen, down 5.3 percent. Net income in the nine months to December was 232.4bn yen, from 266.1bn yen a year earlier.
However, Nissan expects a net profit of 320bn yen in the fiscal year to March. The forecast is down 20 percent from an earlier estimate last year. “We anticipate further yen correction... And we remain confident that we will meet our full-year outlook,” Nissan said, adding that the company has “taken action to reignite our sales momentum and growth”.
Japanese firms have struggled with a strong yen as it made their products less competitive overseas and diluted the value of repatriated foreign income. AFP