YOKOHAMA - Nissan Motor Co. on Wednesday raised its earnings forecast for the full fiscal year after reporting a stronger-than-expected third quarter, powering ahead of the competition as its overseas sales grew despite the yen's strength.
The last of Japan's top three car makers to report earnings for the October-December quarter, Nissan posted a 78% jump in net profit, which stood out from the 40% declines reported by its major local rivals Toyota Motor Corp. and Honda Motor Co. But all three upgraded their forecasts for the full fiscal year, which ends March 31, reflecting increased confidence in their ability to cope with the strong yen and weak demand at home, reported The Wall Street Journal.
"Through we foresee risks in rising commodity prices and exchange rate volatility in the fourth quarter, we will continue to deliver good results while remaining focused on our strategies to pursue profitable growth," Nissan President and CEO Carlos Ghosn said in a statement.
Nissan, Japan's second-biggest car maker by volume, posted a net profit of 80.07 billion yen ($971.5 million) in the October-December quarter, up from 44.97 billion yen a year earlier, as vehicle sales grew in all regions except Japan. The result beat the 58.47 billion yen average forecast of six analysts surveyed by the Nikkei.
Sales were up 5.3% to 2.103 trillion yen from 1.996 trillion yen, with jumps of 24% in the U.S. and 20% in China, Nissan's biggest market. The strong overseas performance was due partly to solid demand for newly launched models such as the Juke sport-utility vehicle and Micra compact.
But sales were down 21% in Japan, where the end of government purchasing subsidies in September has dented demand.
Operating profit fell 15% to 114.00 billion yen from 134.07 billion yen, with the stronger yen accounting for a negative effect of around 50 billion yen.
But higher sales volume, cost-cutting and improved earnings at its partner Renault SA helped Nissan log a net-profit increase, Joji Tagawa, Nissan's corporate vice president, said at a press conference. Nissan owns a 15% stake in the French car maker, while Renault owns 43% of the Japanese company.
For the fiscal year through March, Yokohama-based Nissan now expects to sell 4.165 million vehicles world-wide, up from its previous projection of 4.100 million, mainly due to growing demand in China. It projects a net profit of 315 billion yen, an operating profit of 535 billion yen and sales of 8.800 trillion yen. The outlook is based on an assumption that the dollar will average 80.9 yen and the euro 110.2 yen for this fourth quarter. The company previously forecast a net profit of 270 billion yen, operating profit of 485 billion yen and sales of 8.770 trillion yen.
Even so, it's still too early to say that Nissan's recovery is complete. The company's new full-year earnings forecast represents about 60% of its record 518.1 billion net profit, earned in the fiscal year ended March 2006.
