Nissan raised its annual net profit forecast again on strong interim results, aiming to weather the global chip crunch as it shifts focus to electric vehicles (EVs).
The Japanese car giant’s earnings have been boosted by a weaker yen, but the semiconductor shortage has hit its production figures and analysts warn the chip crisis may take longer than expected to resolve.
“Given the unpredictable environment surrounding us, we are approaching a period ahead of us with cautious optimism,” chief operating officer Ashwani Gupta told reporters.
With high global demand for cars, “our problem isn’t how many we want to sell. Our problem is how many we can produce”, he said.
Nissan now expects an annual net profit to March 2022 of 205 billion yen ($1.77 billion), having already tripled its yearly profit outlook in November to 180 billion yen.
Series of Trials
The automaker, which has faced a series of trials in recent years including weak demand and fallout from the arrest of former boss Carlos Ghosn, said its cost-cutting recovery plan had improved the profitability of its sales.
The “ongoing depreciation of the yen and a review of the impact of rising raw material prices” will also help it reach its targets, Nissan said in a statement.
It still aims to sell 3.8 million vehicles by the end of March – a target earlier revised down from 4.4 million – as the chip shortage and the spread of the Omicron coronavirus variant continue to affect plant operations.
Nissan reported a net profit of 201.3 billion yen in April-December 2021, compared with a net loss of 367.7 billion yen in the same period the previous year, when virus lockdowns hit the automotive industry hard.
It also saw a year-on-year increase in revenue during the nine-month period, although revenue in the third quarter was slightly down at 2.2 trillion yen.
Nissan said its nine-month results were boosted by “favourable market conditions in the United States” and improvement in the quality of sales across the board.
Financial Discipline
This created “a significant increase in net revenue per unit of major, new models”, while strict financial discipline also helped increase profits.
Satoru Takada, an automotive analyst at research and consulting firm TIW, said a good sales environment had allowed Nissan to avoid big discounts.
“What remains to be seen is whether it can stay competitive in the long run, especially once rival companies start using more incentives,” he said.
Takada warned that the semiconductor situation “might take longer than expected” to improve as companies in different industries compete for the essential components.
Last month, Nissan and its alliance partners Renault and Mitsubishi Motors pledged to boost cooperation as they plough more than $25 billion into the development of EVs over the next five years.
- AFP, with additional editing by George Russell
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