Nissan outlook defies optimism among other Japan car makers

Customers look at Nissan Motor’s electric vehicle Leaf at the showroom of the global headquarters of Nissan Motor in Yokohama, south of Tokyo, Japan, yesterday. Nissan yesterday announced financial results for the third quarter of fiscal year 2012, ending 31 March 2013, as well as for the first nine months. In the third quarter of October-December 2012, the consolidated net income after taxes totaled ¥54.1bn ($670mn), a year-on-year decline of 34.6%.

Reuters/Tokyo Nissan Motor bucked the optimistic trend among Japanese carmakers reporting quarterly earnings, leaving its annual profit forecast unchanged as sluggish sales weighed on its bottom line while others got a boost from a weakening yen. The cheaper yen is improving the competitiveness of cars made by Nissan, Toyota Motor, Honda Motor and other Japanese brands when exported to key markets such as the US, and adding to pressure on their South Korean rivals. Shares in South Korea’s biggest carmaker Hyundai Motor have fallen around 20% since the start of October; by contrast, Toyota shares are up more than 50%. The revivifying effect of the falling yen is being felt throughout Japan’s auto industry supply chain. Last week the world’s second-biggest auto parts supplier Denso Corp — part-owned by Toyota — raised its annual profit forecast by 6.7%, saying the currency move would help it and its customers. This week a South Korean finance ministry official warned of possible market intervention as the yen’s slump against the won — by more than 22% last year and another 5.6% so far this year — was cutting into South Korea’s export competitiveness. Adding to the discomfort for the South Korean industry, in January Toyota’s Camry model won the “Korea Car of the Year Award”, industry press reported, bagging a prize usually handed to domestically made vehicles. Among Japan’s carmakers, currency moves are expected to have the most dramatic impact at Japan’s fifth-ranked firm Mazda Motor, which raised its operating profit outlook for the year ending in March by 80%. Fuji Heavy Industries, which makes Subaru cars, lifted its operating profit outlook by 30%, Toyota by 10%, and Suzuki Motor and Daihatsu Motor by 8% apiece. Nissan left its annual net profit forecast unchanged at ¥320bn ($3.43bn). “Everyone faces the same yen moves, but for Nissan, there are regions in which it is selling below its target,” said J P Morgan analyst Kohei Takahashi, referring to Japan and the US. “It has been running with aggressive targets for all markets. For the past year or two, that worked out. But now the company is entering a cycle in which it is underperforming its target,” he said. Nissan sold 4.94mn vehicles in calendar year 2012 globally, up 5.8% from 2011, but sales in China, its biggest market, fell 31.3% on average in October-December from a year ago after anti-Japan protests broke out in September in response to a dispute between the countries over the ownership of islands. “Looking forward, we have important vehicle launches,” Nissan chief executive Carlos Ghosn said in a statement. “We anticipate further yen correction. We have made swift organisational changes to help stimulate our business performance. And we remain confident that we will meet our full-year outlook.” In the US, although its redesigned Altima sedan is selling well, Nissan is struggling to shift its older models such as the Rogue crossover SUV. The firm is expected to launch a redesigned Rogue, and in China a new-look Teana sedan, later this year. Shares in Nissan have risen about 45% since mid-November on hopes the weakening yen will boost its bottom line, far ahead of the 30% rise in Tokyo’s benchmark Nikkei index over the same period. Toyota, Honda and Mazda have also posted big gains.