Nissan quarterly profit drops

Nissan, Japan’s second-largest carmaker by sales, yesterday said its quarterly net profit dropped 35 per cent after being hit by production problems in the US, the high yen, a bilateral dispute with China and weak demand in Europe.

For the third quarter, the carmaker suffered a 35 per cent year-on-year drop in net profits to Y54.1 billion on revenues of Y2.2 trillion, down 5.3 per cent.

“Nissan’s performance in the third quarter did not meet our expectations,” said chief executive Carlos Ghosn. “We have taken action to reignite our sales momentum and growth,” he said, expressing confidence Nissan would meet its full-year outlook.

A decline in unit sales up to the third quarter means that Nissan will need to sell 1.44-1.45 million units in the fourth quarter to meet its target but “we have to say that it is very tough” to sell that volume of vehicles in the fourth quarter, Joji Tagawa, corporate vice-president, said yesterday.

Nevertheless, Nissan expects to achieve its full-year operating profit forecast of Y575 billion, because of a favourable foreign exchange rate and cost cutting measures, he said.

Nissan left its full-year forecasts unchanged at Y9.8 trillion in revenues, up 4.3 per cent, and Y320 billion in net profit, a decline of 6.3 per cent. A major problem has been manufacturing in its key market of the US, where it was plagued by production problems.

Although Nissan increased sales in the US, by 8.2 per cent to 819,000 units in the third quarter, this was below the overall market increase of 13.4 per cent and Nissan’s market share fell from 7.8 per cent to 7.4 per cent. The group faced production problems with the launch of new models such as the Altima. This manufacturing “confusion” in North America accounted for about half the Y29.7 billion negative impact from manufacturing expenses on operating profits for the nine months to the end of last year, said Mr Tagawa. – Copyright The Financial Times Limited 2013