Nissan full-year results beat estimates, forecast bullish

NISSAN said on Thursday (May 11) its full-year net profit slightly topped estimates and offered an upbeat forecast for the current fiscal year, despite warning of “challenging” conditions ahead.

The Japanese automaker said it logged net profit of 221 billion yen (S$2.2 billion) for the year to March 2023, just beating its prediction of 220 billion yen, and projected 315 billion yen for the coming year.

The company said the gains were the result of sales improvements and cost-cutting as well as favourable foreign exchange rate fluctuations.

These helped offset the effects of an increase in raw material prices and inflation.

“The prolonged shortage of semiconductors and tight supply of parts due to the shutdown in China had a sizeable impact on production plans and vehicle supply,” the company said.

But while crises such as the global semiconductor crunch are yet to be fully resolved, there is reason to be cautiously optimistic about Nissan’s business in China for the year ahead, said president and chief executive officer Makoto Uchida.

“China’s end to zero-Covid policy resulted in normalising its economic activity,” he said, adding the situation there “is improving”.

Nissan is on course to recover from the havoc wrought by pandemic lockdowns, the war in Ukraine and the arrest of talismanic former boss Carlos Ghosn, which all helped plunge its full-year results into the red in 2020 and 2021.

Last month, it said its global sales for the year to March 2023 stood at 3.16 million units, up 5.4 per cent from a year earlier.

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But despite the increase, the sales were still lower than its earlier estimate of 3.4 million units, an indication that virus lockdowns in China and semiconductor shortages hit Nissan hard, analysts said.

In March, ratings agency S&P downgraded Nissan’s credit rating to junk status on the assumption of another tough year ahead.

But the worst of a surge in raw material costs may now have passed, said Satoru Takada, an auto analyst at research and consulting firm TIW.

Earlier this year, Nissan signed a landmark deal re-balancing its fraught alliance with French partner Renault.

The revamped tie-up ended Renault’s decades-long dominance over Nissan that has often been dubbed the “unequal treaty”, slashing its share in the Japanese company to 15 per cent from 43.4 per cent.

The agreement also involved Nissan taking a stake of up to 15 per cent in Renault’s new electric vehicle venture Ampere.

The deal marked the latest twist in Nissan’s recent years of tumult, from the arrest of Ghosn to pandemic-triggered chip shortages and the conflict in Ukraine, which led the automaker to exit Russia, citing supply chain disruptions. AFP