Nissan Profit Declines on Yen, Mitsubishi Motors Posts LossMa Jie and Masatsugu Horie
Yen has strengthened more than 14% against dollar this year
Mitsubishi selling stake to Nissan after mileage scandal
Nissan Motor Co. posted a 11 percent drop in quarterly profit after a stronger yen eroded overseas earnings, while a slump in domestic sales pushed minicar partner Mitsubishi Motors Corp. into a loss after its mileage scandal.
Net income in the quarter through June fell to 136.4 billion yen ($1.3 billion), in line with analysts’ estimates, the Yokohama, Japan-based automaker said on Wednesday. Mitsubishi reported a loss of 129.7 billion yen after a fuel-economy ratings scandal prompted the carmaker to seek a rescue from Nissan.
The first of Japan’s major automakers to report earnings, Nissan’s profit hit from a strong yen may presage next week’s results at Toyota Motor Corp. and Honda Motor Co. The rising yen, which has strengthened more than 14 percent this year against the U.S. dollar, is eroding Japanese competitiveness and lowering the value of repatriated earnings.
“Nissan’s business down the road hinges on currency exchange rates,” Tsunenori Ohmaki, an analyst at Tachibana Securities Co., said by phone. “And if the yen gets stronger then it will be very tough for them.”
Nissan maintained its full-year forecast for a 525 billion yen profit for the current fiscal year. Operating profit in the first quarter fell 9.2 percent to 175.8 billion yen. The yen strengthened more than 18 percent against the U.S. dollar in the 12 months through June.
The automaker said operating profit rose by 38 percent if the impact of the currency exchange is excluded. The goal of an operating profit margin of 8 percent in the current year will be difficult to achieve, Joji Tagawa, corporate vice president, said at a briefing in Yokohama on Wednesday.
Deliveries of Nissan in Japan tumbled more than 20 percent in the quarter as it stopped selling the DayZ models after supplier Mitsubishi Motors said it manipulated fuel-economy data. Nissan saw strong orders for DayZ this month after Mitsubishi Motors resumed production, said Asako Hoshino, who oversees domestic sales. The automaker isn’t sure of the outlook for demand after the backlog is cleared, she said.
Mitsubishi Motors, in which Nissan plans to acquire a stake for about $2.2 billion, last month forecast its first loss in eight years. The company reiterated its full-year forecast given in June for a 145 billion yen deficit.
The U.K.’s vote to depart from the European Union isn’t “all bad” as a weaker pound is good for exports and the consequences from the step may take years to manifest, said Nissan’s Tagawa. Nissan produced 475,000 vehicles in Britain last year, exporting about 80 percent of them.