Nissan Returns to the Black

May 12, 2010
Company expects net profit to surge 254% for the fiscal year ending March 2011

Japan's number three automaker Nissan Motor posted a return to the black on May 12 and forecast profit to more than triple this fiscal year on hopes for its new electric car and emerging market demand.

Nissan saw a 42.4 billion yen (US$460 million) annual profit as cost-cutting efforts and sales growth in emerging markets, particularly China, helped turn around a huge 233.7 billion yen loss from the year before.

"Although we are still in crisis-mode, we are well on track to complete recovery," Nissan chief executive Carlos Ghosn said, cautioning however that the market remained "volatile and uncertain".

The automaker said it expected net profit to surge 254% to 150 billion yen for the fiscal year ending March 2011.

Nissan, which announced 20,000 job cuts at the height of the financial crisis, joins rivals Toyota and Honda in forecasting rising profits, painting a more upbeat outlook for a sector that was ravaged by the global downturn.

The automaker saw a much narrower fourth quarter net loss of 11.6 billion yen in the three months ended March, compared to a loss of 276.9 billion yen during the same period a year earlier, when the financial crisis eroded demand.

It sold 3.5 million vehicles globally in the fiscal year, up 3% from the previous year.

Sales volume in China surged 38.7% from the year before, and Ghosn said Nissan would ramp up production to "more than one million cars a year" by 2012 as the nation's booming economy drives demand.

"Our most urgent challenge (in China) is to beef up capacity in order to respond to customer demand," said Ghosn. "If you want to compete in China, you need to produce in China.

"This is a market where we are the number one Japanese automaker."

Japan sales were up 2.9%, lifted by government incentives for car buyers. Sales in the United States fell 3.8%.

The Japanese auto industry has also faced a string of reputation-tarnishing safety recalls, with Toyota issuing notices for around 10 million of its vehicles, Nissan recently recalling around 700,000 and Honda more than 400,000. However, given strengthening demand as key markets recover, analysts said Nissan's annual profit target was on the modest side.

"Nissan has ample room to reach its profit forecast thanks to strong demand from emerging markets, and that's where the company is putting its strength," said Mitsushige Akino, fund manager with Ichiyoshi Investment Management.

Nissan, which was slower than rivals Toyota and Honda to embrace fuel-efficient petrol-electric hybrids, aims to take the lead with the release later this year of the zero-emission Leaf, which has seen strong preorders.

The automaker, which is 43.4% owned by France's Renault, last month announced a partnership with Germany's Daimler AG to exchange capital and share technological know-how in an effort to reduce costs.

Copyright Agence France-Presse, 2010

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