Nissan Cuts Net Income Forecast 20% After China Sales Plunge

Nissan Motor Co. (7201), the top Japanese seller of vehicles in China, cut its full-year net income forecast 20 percent after consumer backlash stemming from a territorial dispute sent sales lower in its largest market.

Net income may total 320 billion yen ($4 billion) for the year ending March 31, compared with its earlier estimate of 400 billion yen, the Yokohama, Japan-based company said in a statement today. The carmaker cut its operating income forecast to 575 billion yen from 700 billion yen.

The cutbacks at Nissan, which follows Honda Motor Co. (7267) in lowering its profit forecast, illustrates how leadership in the world’s biggest auto market has become a handicap amid the row over uninhabited islands claimed by China and Japan. Toyota Motor Corp., which has the smallest share among the three largest Japanese carmakers, raised its income forecast on demand in the U.S. and at home.

“Nissan has a big exposure in China and was hit hard by the protests, but we have seen some nice recovery in production volume,” Kota Yuzawa, an analyst at Goldman Sachs Group Inc. (GS), said by phone before today’s announcement. “There’s no benefit for both Nissan and their Chinese partners. Things will stabilize probably toward the end of the year.”

Nissan shares fell 2 percent to close at 677 yen in Tokyo before the earnings announcement. The stock has declined 2.2 percent this year, compared with the 6.2 percent gain in the Nikkei 225 Stock Average. (NKY)

Net income was 106 billion yen in the July-to-September quarter, beating the 91.2 billion yen average of seven analyst estimates compiled by Bloomberg. Operating income was 166.4 billion yen, versus the 164.4 billion yen average analyst projection.

To contact the reporter on this story: Ma Jie in Tokyo at jma124@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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