February 8, 2012
Nissan Maintains Full-Year Profit Forecast, Financial Results Lead Japan’s Top Three
Feb. 8 — Yokohama — Nissan Motor capped a week of financial results for the top three Japanese automakers with a rise in third quarter earnings of 3.2% to 82.7 billion yen, or $1.07 billion.
The yen averaged 79 to the dollar during the quarter, a critical headwind for Japanese carmakers.
But results reported for the first nine-month period showed Nissan faring better than some rivals in battling the uncompetitive currency, and managing through the aftermath of natural disasters and the ongoing Eurozone crisis.
Nissan’s net income slid 7% to 266.1 billion yen (US$3.37 billion) for the April-December period, while Honda’s net income sank more than 70%, and Toyota’s nearly 60% to 162.5 billion yen (US$2.06 billion).
“I think as an absolute result of sales profit and revenue, our results were all solid,” said Joji Tagawa, CVP of Investor Relations.
“The year 2011 has been a challenging one, because of the earthquake, yen appreciation, Thai flooding and European debt crisis and our competitors’ results have been pretty tough. Somebody made a profit warning or one of the lowest levels of performance. So on a relative basis, our results were outstanding.”
Tagawa said leadership and focused priorities from management — and even a little luck — have helped Nissan to a better performance despite numerous headwinds in 2011.
Strong global sales have greatly helped Nissan’s bottom line, and while sales in Japan fell slightly, Nissan’s market share inched up.
On the plus side, Nissan enjoyed double-digit percentage-point increases across all sales in Europe, China and North America.
Over the 9-month period, global sales rose 13.6% year-on-year to 3.4 million cars.
Separately, the Renault-Nissan Alliance posted record sales, for a third consecutive calendar year, of 8 million vehicles, and now a has 10.7% global market share.
Christopher Richter, Deputy Head of Research at CLSA, said such unusual success in the Alliance bodes well for the company and signifies a growing trend.
“Nissan has been an exceptional [company] on a highway that is littered with the corpses of failed alliances. I think most makers tend to go, or are not going down the road of a full marriage, but are looking to specific makers that can help them with specific issues.”
Two recently announced plans for new plant facilities in Rio De Janeiro, Brazil, and Aguascalientes, Mexico, will also boost global sales significantly by the first half of 2014.
But on the Japan front, Richter says automakers will need to think long-term about domestic production and the strong yen.
“You’re going to do everything you can do to mitigate that in the short term, such as procuring components from overseas or importing cars into Japan – Nissan’s doing that from Thailand with one vehicle – and all of these other kind of measures. But if we’re in it for the long haul, you do start to ask yourself ‘Is having such a large manufacturing base in Japan sustainable?’ Or, do you have to start shuttering some plants?”
Nissan executives have voiced their deep concerns, but on the financial front are sticking to year-end forecasts, including net income of 290 billion yen (US$3.63 billion).