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Nissan Raises Profit View as Currency Helps Offset Shortages (Bloomberg)

Published November 9, 2022

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Bloomberg News

The article below is sourced from Bloomberg Wire Service. The views and opinions expressed in this story are those of the Bloomberg Wire Service and do not necessarily reflect the official policy or position of NADA.

Nissan Motor Co. raised its profit outlook as a weak yen boosted repatriated income, helping to compensate for a persistent shortage of chips and supply-chain constraints that have curtailed output in the industry.

Operating profit for the fiscal year through March will be ¥360 billion ($2.5 billion), the Japanese automaker said in a statement Wednesday. That’s an upgrade from an outlook for ¥250 billion announced in July, and exceeds analysts’ average estimate of ¥337 billion.  

The yen’s historic decline is a tailwind for Japanese carmakers grappling with parts shortages and surging material costs. The currency slumped to a 32-year low against US dollar in October and has lost about a fifth of its value this year, making Japanese vehicle exports more competitive abroad and boosting earnings brought home. Nissan also revised its yen-dollar assumption for the year to ¥135 from ¥120.

“Volatile currency movements cause various issues, and we would prefer more stability,” Chief Executive Officer Makoto Uchida said in a briefing.

Revenue will be ¥10.9 trillion for the fiscal year instead of the prior guidance for ¥10 trillion, the carmaker said. Nissan also lowered its global vehicle sales target to 3.7 million units from 4 million.

The new target suggests that Nissan will have to assemble 2.13 million vehicles in the second fiscal half, according to Bloomberg Intelligence analyst Tatsuo Yoshida. “That’s OK as long as production stays on track, but if there are any new factors that could be a difficult target,” he said. 

Nissan shares are down 11% this year. Its earnings were released after the market closed in Tokyo on Wednesday. The carmaker said it is considering raising its dividend. 

Operating profit in the second quarter was ¥91.7 billion, compared with analysts’ average estimate for ¥85 billion. Sales rose 30% from a year earlier in the latest quarter to ¥2.52 trillion.

Nissan’s alliance partner Renault SA on Tuesday said talks to reboot a two-decade-old alliance are continuing after the French carmaker moved ahead with plans to carve out its electric-vehicle business. Nissan and Renault are having open and productive discussions, Uchida said.

Read more: Renault Says Strategy ‘Works by Itself’ as Nissan Talks Continue

Earlier Wednesday, Honda Motor Co. also raised its profit outlook on similar factors. Toyota Motor Corp. last week lowered its production target while sticking to a conservative profit outlook because of a persistent shortage of chips.

Mitsubishi Motors Corp., part of the alliance with Nissan and Renault, upgraded its operating profit target more than analysts had anticipated. 

(Updates with CEO comments in fourth paragraph.)

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