Tokyo: Nissan Motor Co posted an 86% fall in quarterly operating profit, hit by a stronger yen and declining sales, but avoided the loss analysts had expected by cutting costs aggressively.
Predicting no convincing recovery in global car demand, Japan’s No.3 automaker kept its forecasts for an annual loss unchanged as a lack of hybrid cars overshadowed solid sales in China.
Chief executive Carlos Ghosn has previously said Nissan will focus on returning to positive free cash flow through joint cost-cutting efforts with French partner Renault SA.
While some bright signs are emerging on the sales front — Nissan has enjoyed stellar growth in China this year thanks to a line-up heavy in smaller cars that enjoy tax incentives — its lack of hybrid models has left it trailing the market in Japan.
For the first time, Nissan, Japan’s No.3 automaker, sold more vehicles in China than at home in the first half of the year.
Nissan made an operating profit of ¥11.6 billion ($122.9 million) in April-June, down from a profit of ¥80 billion a year earlier but beating a consensus loss estimate of ¥117 billion in a poll of four analysts by Thomson Reuters.
Nissan, held 44% by France’s Renault SA, lost a net ¥16.5 billion in the first quarter, against a profit of ¥52.8 billion a year ago.
Revenue fell 36% to ¥1.51 trillion.
For the financial year to 31 March, 2010, Nissan kept its operating loss forecast at ¥100 billion and its net loss forecast at ¥170 billion.
Larger rival Honda Motor Co also surprised analysts by posting a first-quarter profit on Wednesday, and raised its annual profit forecast.
“We believe it would be premature to lift forecasts at this juncture,” Nissan chief operating officer Toshiyuki Shiga said, listing among the risks a further rise in the yen and drops to global car sales when government steps to stimulate demand come to an end.
Shiga said Nissan was on track to return to positive free cash flow by the end of the financial year.
As Honda and top ranked Toyota Motor Corp aim to spur car sales with new hybrid vehicles, Nissan is pouring its efforts into creating a market for pure electric vehicles with the first launches in Japan and the United States next year.
Partly on hopes for its lead in electric vehicles, shares in Nissan have almost doubled in price this year, making them the best performer among Japanese auto shares. Tokyo’s transport sub-index gained 44% in the same period.
Before the results were announced, Nissan ended up 0.8%, while the transport sector gained 0.3%.