Nissan expects 15 pct drop in profit for this year

AP News
Posted: Jun 23, 2011 8:08 AM
Nissan expects 15 pct drop in profit for this year

Nissan is forecasting a 15.4 percent drop in profit for the fiscal year through March 2012 because of production disruptions from the March earthquake and an unfavorable exchange rate.

But the Japanese automaker is expecting to sell more cars around the world, despite the disaster in northeastern Japan that battered production earlier this year at 4.6 million vehicles, up 9.9 percent on year _ underscoring Nissan's resilience.

Nissan President and Chief Executive Carlos Ghosn said Thursday that Nissan hopes to boost market share in the U.S. from the current 9 percent to 10 percent, seeing that as "a milestone." He acknowledged that won't be reached this fiscal year because of supply shortages caused by the disaster, but Nissan had been almost there when the magnitude 9.0 quake struck on March 11.

He also said that the company's six-year plan, to be disclosed Monday, will show strong growth for the years ahead, not only in emerging markets but also in developed markets like the U.S. and Europe.

Nissan Motor Co., Japan's No. 2 automaker after Toyota Motor Corp., said Thursday that its profit will drop to 270 billion yen ($3.4 billion) for the fiscal year through March 2012 from 319 billion yen the previous fiscal year.

Sales are expected to edge up 7.1 percent to 9.4 trillion yen ($117.5 billion).

Nissan, allied with Renault SA of France, said it expects to sell more vehicles the fiscal year ending March 2012 in all major global regions.

Its vehicle sales are expected to grow 1.7 percent in Japan, 6.8 percent in North America, 10.4 percent in Europe and 12.3 percent in China.

The maker of the March subcompact, Leaf electric vehicle and Infiniti luxury models said production was disrupted by a parts shortage after the March quake and tsunami destroyed key suppliers. But it has mostly recovered and will be back to normal by October, according to Nissan.

Ghosn was confident Japan's brand image had not suffered from the disaster. Its people are widely admired for their "stoic, resilient, focused and wise" efforts to rebuild in the aftermath of the quake and tsunami, which killed up to 23,000 people and caused more than $300 billion in damage.

"There is a positive side," Ghosn told a small group of reporters at Nissan's headquarters in Yokohama. "All Japanese companies will benefit from this image of Japan as resilient."

If the disaster had not happened, Nissan could have expected to do even better for the current fiscal year, said Nissan executive Joji Tagawa.

Hurting its bottom line were the strong yen and the rising cost of raw materials, he said.

The strong yen erased 135 billion yen ($1.7 billion) from Nissan's operating profit, and Tagawa said Nissan could have forecast being in the black if it weren't for that damage.

The rise in material costs remains a risk this year, as do worries about a global slowdown and an electricity shortage in Japan after nuclear power plants were either damaged or shut down after the March 11 disaster.

Japanese automakers are going to produce cars on weekends and take Thursdays and Fridays off to avoid blackouts from a power crunch.

Like other Japanese automakers, Nissan did not give its forecasts when it released earnings last month because of uncertainties about the quake.

"Continuous growth in 2011 will bring Nissan a new record volume," Ghosn said. "The unrelenting work ethic of Nissan employees is an inspiration, particularly after one of the worst natural disasters in modern history."


Yuri Kageyama can be reached at