Nissan Posts Slowest Profit Growth Among Japan Carmakers

Nissan Motor Co. (7201) reported the slowest annual profit growth among Japanese automakers as success in China backfired when a political dispute triggered a wave of anti-Japan sentiment in the world’s biggest car market.

Net income in the 12 months ended March increased 0.3 percent to 342.4 billion yen ($3.4 billion), the Yokohama, Japan-based company said in a statement today. Next fiscal year’s 420 billion profit forecast was the smallest among Japan’s three largest automakers.

Nissan, which outsells all Japanese automakers in China, was hardest hit when Chinese consumers began to shun Japanese brands as protests flared across the country in September. All three of Japan’s largest carmakers saw their China sales fall for three straight quarters, though the plunge in the yen made up for the shortfall at Toyota Motor Corp. (7203) and Honda Motor Co.

“The impact from China issues is significant,” said Koichi Sugimoto, an auto analyst at BNP Paribas SA in Tokyo. “Even in the January-to-March quarter, there wasn’t a recovery yet. Although they’ll improve in the second half, we can’t be too positive.”

Brightening Outlook

Still, this year’s outlook is brighter as the weakening yen -- it breached 100 to the dollar in U.S. trading yesterday -- bolsters profits for Japanese companies. Nissan forecast net income will rise 23 percent to in the year ending March, the highest in six years. The forecast was below the 475.6 billion yen average of 23 analyst estimates compiled by Bloomberg. Revenue will probably increase 7.7 percent to 10.37 trillion yen, according to Nissan.

Photographer: Dario Pignatelli/Bloomberg

A woman walks past Nissan Motor Co. vehicles on display at the Siam Motor Sales dealership in Bangkok. Nissan expects global deliveries this fiscal year to climb to 5.3 million vehicles, led by sales of the redesigned Altima sedan in the U.S. and the new Teana sedan in China. Close

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Photographer: Dario Pignatelli/Bloomberg

A woman walks past Nissan Motor Co. vehicles on display at the Siam Motor Sales dealership in Bangkok. Nissan expects global deliveries this fiscal year to climb to 5.3 million vehicles, led by sales of the redesigned Altima sedan in the U.S. and the new Teana sedan in China.

The yen has weakened against all major currencies tracked by Bloomberg since Prime Minister Shinzo Abe helped reverse the appreciation of the yen in mid-November, falling more than 20 percent against the dollar. The company gains about 15 billion yen in operating profit with every one-yen drop against the dollar, according to the company.

Japan’s second-largest carmaker based its profit outlook on an exchange rate of 95 yen against the dollar, and 122 yen versus the euro. It produced about 22 percent of its cars at home last fiscal year, compared with 44 percent at Toyota.

The Japanese currency breached 100 yen against the dollar in New York trading yesterday, reaching what Nissan chief executive officer Carlos Ghosn calls “neutral territory.” It will end 2013 at 105 to the dollar and 132 versus the euro, according to the average estimate compiled by Bloomberg.

China Slump

Nissan expects global deliveries this fiscal year to climb to 5.3 million vehicles, led by sales of the redesigned Altima sedan in the U.S. and the new Teana sedan in China.

In the January-to-March quarter, net income reached 110.1 billion yen, compared with the 93.6 billion yen average of five analyst estimates compiled by Bloomberg. Operating income climbed 48 percent to 174.4 billion yen and revenue increased 6 percent to reached 2.87 trillion yen.

Profit from Asian markets outside of Japan -- mainly China -- fell 67 percent to 13.9 billion yen, missing the 17.4 billion yen average of a Bloomberg survey of four analysts. Deliveries in China, Nissan’s biggest market, fell 15 percent last quarter, after a 32 percent drop the previous quarter.

Nissan is projecting a recovery. Deliveries will probably climb to sell 1.25 million vehicles in China in 2013 after falling to 1.18 million last year, helped by Teana introduced in February, the company said.

U.S. Sales

Earnings from the North America climbed 80 percent to 60.2 billion yen, compared with the 66.3 billion yen average Bloomberg estimate, after Nissan introduced revamped models including Altima sedans, Pathfinder sport utility vehicles and Sentra compact sedans. U.S. deliveries will continue to increase this fiscal year, Nissan said.

Nissan is seeing improvement in the U.S. The new Altima, Nissan’s best-seller in the U.S., outsold Honda’s Accord, Toyota’s Camry, and Ford Motor Co. (F)’s Fusion in a tightening sedan duel in March. April sales of the Nissan sedan surged 35 percent, while deliveries fell 14 percent for the Camry and 5.4 percent for the Accord.

Incentives in the U.S. are falling to $2,443 per unit this year through April, 14 percent lower compared with a year earlier, according to market researcher Autodata. Yet Nissan still has higher incentives than Toyota and Honda, which sell more cars in the U.S.

Profit from Nissan’s home market jumped eightfold to 100.7 billion yen in the quarter ended March, compared with the 79.1 billion yen average Bloomberg estimate.

Japan Sales

Nissan sales fell in Japan last fiscal year as the government’s subsidy program for purchases of fuel-efficient vehicles expired in September. Deliveries in Japan may climb this fiscal year, Nissan said today. The Japan Automobile Manufacturers Association expects domestic sales to fall 12 percent this year.

The carmaker will introduce the first minicar jointly developed with Mitsubishi Motors Corp. (7211) next month, as minicars take up about 40 percent of the new car sales in Japan, according to Japan Automobile Manufacturers Association.

In Europe, where car sales are headed to a 20-year low on the economic slump, Nissan posted a loss of 11.2 billion yen, compared with the average analyst estimate of 11 billion yen profit.

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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