Nissan Raises Profit Forecast as It Recovers Faster Than Rivals From Quake
Nissan Motor Co., Japan’s second- biggest automaker, raised its profit forecast as it recovered faster than Toyota Motor Corp. and Honda Motor Co. from the country’s record earthquake in March.
Net income will be 290 billion yen ($3.7 billion) in the year ending March 31, or 7.4 percent higher than its earlier forecast, the Yokohama-based company said in a statement today. Second-quarter profit exceeded analysts’ estimates.
Nissan raised its annual sales forecast after it sold more Sunny sedans in China, while Toyota and Honda delivered fewer cars globally last quarter. Chief Executive Officer Carlos Ghosn is now stepping up his efforts to expand in China as he seeks to boost Nissan’s share of the world’s biggest automobile market fivefold to 10 percent by 2016.
“Nissan’s management was very fast in responding to the disasters and that should be credited,” said Takeshi Miyao, an analyst at consulting firm Carnorama in Tokyo. “It wasn’t just luck.”
Nissan, the best-performing stock among Japan’s three biggest carmakers this year, fell 2.8 percent to 701 yen at the close of trading on the Tokyo Stock Exchange, before the earnings announcement.
In the second quarter ended September, net income fell to 98.4 billion yen after the yen, the best performing major currency last quarter, eroded the value of overseas earnings. That beat the 82.5 billion yen average of eight analyst estimate compiled by Bloomberg.
“In spite of unfavorable currency fluctuations, numerous natural disasters and a volatile global economy, we remain on track to deliver a significantly profitable full-year performance,” Ghosn said in a statement.
The full-year vehicle sales target was raised to 4.75 million units from an earlier forecast of 4.6 million. Gains will be led by China, where sales will rise 8.7 percent, followed by 6 percent expansion in Europe and 4.9 percent growth in Japan, Nissan said. Vehicle sales rose 11 percent to 1.17 million units in the second quarter, it said.
The results are a contrast to those at domestic rivals. Mazda Motor Corp. today cut its forecasts, predicting its fourth consecutive annual loss. Honda Motor Co. this week scrapped its earnings projections, saying the company can’t yet assess the financial toll from Thailand’s worst floods in almost 70 years.
The Thai floods exacerbated Japanese carmakers’ struggle to recover from a year in which they’ve had to cope with a record earthquake in Japan in March and contend with a yen trading near its highest levels in more than 60 years. Yuuki Sakurai, president at Fukoku Capital Management in Tokyo, said this week he expects Toyota to cut its full-year profit forecast on the floods.
Nissan, targeting 8 percent of China’s luxury car market, is stepping up efforts to expand in the world’s largest car market. It said earlier today it plans to open a new global headquarters for the Infiniti luxury brand in Hong Kong in April.
Still, China accounts for a greater portion of Nissan’s revenue than at Toyota or Honda, meaning the maker of the Teana sedan is more vulnerable to slowing growth in the country, JPMorgan Chase & Co. analyst Kohei Takahashi wrote in a report last month.
China’s auto manufacturing association has cut its 2011 industry sales forecast twice in the past three months. Vehicle sales will increase 3 percent to 5 percent this year, from 32 percent last year, according to the nation’s auto manufacturing association last week.
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