» Subscribe Today!
The Power of Information
Home
The Ledger - EST. 1978 - Nashville Edition
X
Skip Navigation LinksHome > Article
VOL. 35 | NO. 29 | Friday, July 22, 2011




Nissan quarterly profit drops 20 percent

Print | Front Page | Email this story

TOKYO (AP) — Nissan's quarterly profit dropped a smaller-than-expected 20 percent as Japanese automakers took a battering from the quake and tsunami disaster that disrupted car production and destroyed dealerships.

A soaring yen and rising material costs also helped drag net profit for the fiscal first quarter down to 85 billion yen ($1 billion) from 106.6 billion yen in the April-June quarter last year, Nissan Motor Co. said Wednesday.

But Nissan Chief Executive Carlos Ghosn said the numbers show the maker of the Leaf electric car and Infiniti luxury models is holding up despite the huge odds.

The magnitude-9.0 earthquake on March 11 in northeastern Japan destroyed key suppliers of components, disrupting production for all Japanese automakers.

But Nissan's production has been recovering faster than its rivals — and Nissan officials acknowledge faster than they had expected themselves.

The result also outdid forecasts. A FactSet survey of analysts had forecast a profit of 55 billion yen ($705 million).

Nissan, Japan's second biggest automaker, sold 1.056 million vehicles in the quarter, up 10.6 percent from a year earlier. Quarterly sales edged up 1.6 percent to 2.08 trillion yen ($26.7 billion).

"Our rapid recovery from the natural disasters in March once again shows the power of Nissan in responding effectively and decisively to crisis," Ghosn said.

Last month, Ghosn disclosed a five-year growth plan, his most ambitious since the revival plan for Nissan that he set in motion in 1999. Then, Nissan was on the verge of collapse, and Ghosn was sent in by alliance partner Renault SA to turn it around.

Nissan, based in Yokohama, a port city west of Tokyo, stuck to its forecast for annual profit to fall 15.4 percent to 270 billion yen ($3.5 billion) profit in the fiscal year ending March 2012. It expects sales to rise 7.1 percent to 9.4 trillion yen ($120 billion) and unit sales to reach 4.6 million vehicles, up 9.9 percent to a record for Nissan.

The automaker is optimistic of continued growth, especially in emerging markets such as China. On Tuesday, Ghosn announced an $8 billion expansion plan for China, aiming to nearly double its annual sales there to 2.3 million vehicles by 2015, up from 1.3 million last year.

A big uncertainty is the unfavorable exchange rate, which hurts all the Japanese automakers. Nissan is counting on the dollar trading at 80 yen, but it sunk below 78 yen in Tokyo on Wednesday. A weak dollar reduces the value of overseas earnings for the Japanese.

The strong yen erased 55 billion yen ($705 million) from Nissan's operating profit for the April-June quarter, according to the company.

Nissan executive Joji Tagawa told reporters the damage from the quake and tsunami in northeastern Japan had hurt Nissan, but it did not result in its biggest fear — market share getting grabbed away by rivals while it couldn't deliver cars because of production problems.

He said hardworking Nissan employees had persevered, and proved the power of Japanese "monozukuri" which encapsulates the ideas of "craftsmanship" and "creativity" rather than simply "manufacturing."

Nissan booked a one-time loss of 21 billion yen ($269 million) related to the disaster for the April-June quarter, Tagawa said, mostly for the production losses and repair costs.

Nissan also shrugged off problems from Japan's electricity shortage caused by a nuclear power plant in northeastern Japan, whose reactors were sent into meltdown by the tsunami.

Another nuclear plant was recently shut down over quake fears, further shrinking Japan's electricity supply.

Japanese automakers are running assembly plants on the weekend, and taking Thursday and Friday off, in an effort to reduce electricity consumption by 15 percent and prevent a power crunch at peak demand times.

But Tagawa said the change was proving a plus because electricity was cheaper on weekends.

Toyota Motor Corp., the world's biggest automaker, reports earnings Aug. 2. Honda Motor Co. reports Aug. 1.

Nissan stock slipped 1.9 percent to close at 848 yen in Tokyo, where trading ended before earnings were announced.

Follow us on Facebook, Twitter & RSS:
Sign-Up For Our FREE email edition
Get the news first with our free weekly email
Name
Email  
TNLedger.com Knoxville Editon
RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 0 0 0
MORTGAGES 0 0 0
FORECLOSURE NOTICES 0 0 0
BUILDING PERMITS 0 0 0
BANKRUPTCIES 0 0 0
BUSINESS LICENSES 0 0 0
UTILITY CONNECTIONS 0 0 0
MARRIAGE LICENSES 0 0 0