Nissan slashes annual profit forecast by 15pc
November 01, 2013 - 11:22:02 am
TOKYO: Nissan on Friday slashed its full-year profit forecast as the Japanese automaker warned of a sluggish European market and costs tied to vehicle recalls, while separately announcing a management shuffle.
The firm said it now expected to earn 355 billion yen or $3.62 billion in the year to March, down from an earlier 420 billion yen forecast, while its half-year profit rose 6.5 percent from a year ago.
Nissan said that sales in the half-year period jumped 14.7 percent to 5.21 trillion yen. It earned a net profit of 189.8 billion yen.
"Nissan's results reflect improved demand for our new products in Japan and the Americas," chief executive Carlos Ghosn said in a statement.
"This was offset by difficult conditions in Europe, volatile demand in several emerging markets and higher expenses related to recalls."
Ghosn is due to hold a press briefing later in the day.
Japanese automakers, once lauded for their quality and safety, have been stung in recent years as they recalled millions of defective vehicles with Toyota facing lawsuits over an acceleration issue in the United States.
Toyota, the world's biggest automaker, was cleared in one case last month while another jury found the automaker liable for a fatal accident.
Nissan, maker of the Altima sedan and luxury Infiniti brand, also announced a management shakeup "designed to enhance Nissan's performance".
Like rivals Toyota and Honda, Nissan has benefited from a sharply weaker yen over the past year, which makes them more competitive overseas and inflates the value of repatriated foreign income.
Honda said Wednesday its net profit soared almost 47 percent in the three months to September as Japan's third-largest carmaker benefited from a slide in the yen and a pickup in the key US market.
Toyota is to report its half-year earnings next week.
"Japanese automakers have been seeing improved results thanks to the weak yen and stable demand in North America," said Shigeru Matsumura, auto analyst with SMBC Friend Securities in Tokyo.
But a sales tax hike in Japan next year and concerns about demand in China, the world's biggest auto market, could weigh on the sector's results, he added.
China has been a key question mark for Japanese automakers, particularly Nissan.
It struggled to recover from the impact of a consumer boycott of Japan-brand goods in China last year, as a long-running diplomatic dispute over a chain of East China Sea islands flared anew.
Japanese firms saw sales plunge and many closed factories for a time as urban riots swept parts of China.
The vast market accounts for about one-quarter of Nissan's overall sales, far higher than its domestic rivals.
The automaker has been working to recover lost market share as Volkswagen and US-based General Motors tried to capitalise on the consumer boycott.
Nissan has also undertaken an aggressive new product rollout plan in a bid to tap fast-growing economies including Brazil, Russia and Indonesia.
It has also resurrected its budget Datsun brand to woo a new generation of cost-conscious buyers in emerging markets.
Nissan, which in 1981 killed off the brand that was a favourite of legions of Western drivers, has launched a "next-generation" of the car to penetrate high-growth developing economies, including India. (AFP)