Japan's Nissan Motor Co. said Tuesday it expects net profit to tumble almost 30 percent this year due to sluggish sales in maturing markets, a stronger yen and high material costs.
Japan's number three automaker reported annual net earnings of 482.26 billion yen (4.7 billion dollars), up 4.7 percent from the previous fiscal year, when its profits fell for the first time under onetime saviour Carlos Ghosn.
Operating profit gained 1.8 percent to 790.83 billion yen in the year ended in March as revenue increased by 3.4 percent to 10.82 trillion yen, a company statement said.
Ghosn hailed the results as a strong performance in what he said was “a challenging and volatile environment.”
The automaker sold 3.77 million vehicles, an increase of 8.2 percent from the previous year, despite a decline in the Japanese, US and European markets.
For the current fiscal year, Nissan predicted a 29.5 drop in net profit to 340 billion yen and a 30.5 percent decline in operating profit to 550 billion, on revenue of 10.35 trillion.
“It is going to be a tough year for the whole industry. Every single element of our environment is negative,” said Ghosn, who also heads the automaker's French partner Renault.
“We are approaching this environment with a clean balance sheet (and) a pipeline full of products. We are very confident about Nissan's performance but we have to be realistic.”
Ghosn said a “triple shock” of a stronger yen, rising material costs and a slowdown in developed economies would more than offset rising revenues from booming emerging markets, such as Brazil, Russia and China.
Rival Japanese automakers including Toyota Motor Corp. and Honda Motor Co. are also bracing for sharp falls in profit this year.
“It's a very tough situation right now for the Japanese automakers,” said Hirofumi Yokoi, an analyst at auto consultants CSM Asia.
“The situation is very unfavourable” because of the stronger yen and weak US economy, he said.
Nissan confirmed plans to introduce an all-electric vehicle in the United States and Japan in 2010, seeking to catch up with its rivals Toyota and Honda which have a lead in fuel-efficient vehicles.
“Nissan has an opportunity to mass-market an affordable car that is both independent from oil and environmentally neutral,” Ghosn said.
The announcement came a day after Renault and Nissan said they planned to make a 2,500-dollar car in India by 2011 along with local partner Bajaj group, competing with Tata Motor's similarly priced Nano.
Nissan, which was overtaken by Honda in 2006 in terms of sales, also set a target of five percent annual revenue growth on average over the next five years, supported by the planned launch of 60 all-new models.
With Japan's population greying and shrinking, and a credit crunch undermining US sales, Japanese automakers are relying increasingly on emerging economies such as Brazil, Russia, India and China to grow their sales.
Ghosn said Nissan was trying gradually to reduce its dependence on the US market, which the company relies on for roughly 40 percent of its sales.
