Business / Corporate

Nissan reports 25% rise in first-half net profit

Kyodo

Nissan Motor Co. has reported robust growth in its group net profit for the fiscal first half and is maintaining its full-year profit forecast despite lowering its projection for global sales on weaker performance in China.

Nissan, Japan’s second-largest carmaker by volume, posted on Tuesday a group net profit of ¥237 billion for the six months to Sept. 30, up 24.9 percent from the same period last year, as solid growth in North America, Europe and China offset sluggish domestic sales.

Operating profit rose 18 percent to ¥261.94 billion as sales increased 8.2 percent to ¥5.14 trillion.

However, in China, slowing demand for commercial vehicles and intensifying competition in the compact-car market led the company to cut its global sales projection by 3.5 percent to 5.45 million vehicles for the full year through March.

Even so, a windfall from the weaker yen and stronger sales of vehicles that carry higher profit margins helped Nissan leave intact its full-year profit forecast.

For the year, Nissan continues to expect a group net profit of ¥405 billion and operating profit of ¥535 billion. It lifted its sales projection to ¥10.80 trillion from its previous outlook of ¥10.79 trillion.

Nissan joined Honda Motor Co. in reporting solid first-half profit growth while slashing full-year global vehicle sales outlooks on slowing sales in China. Honda last week reported an 18.8 percent net profit growth in the April-September period while trimming its worldwide vehicle sales forecast by 4.3 percent.

Nissan boosted global sales 5.8 percent to 2.58 million vehicles in the six-month period, behind increases of 14.1 percent in North America, 8.4 percent in Europe and 14.6 percent in China.

By contrast, sales in Japan fell 7.6 percent in the wake of the consumption tax hike in April.

For the six-month period, Nissan’s global market share rose to 6.0 percent from 5.9 percent a year earlier, and its operating profit margin increased to 5.9 percent from 5.1 percent.

Still, the figures are far from the key goals set under Nissan’s current business plan for an 8 percent operating profit margin and global market share, both by March 2017.

“There is no change in our 8 percent target” for global market share, Chief Competitive Officer Hiroto Saikawa said at a news conference at Nissan’s headquarters in Yokohama.

While competition is toughening in China, the company sees a tailwind of solid sales continuing in North America, he said.

Saikawa said the 8 percent profit margin is “within reach,” saying that hefty marketing, research and development and manufacturing costs for future growth are only temporarily putting pressure on profitability.

Nissan revived the Datsun brand in March for emerging markets to boost its global sales along with its core Nissan and upscale Infiniti brands. It also seeks to raise profitability by pursuing deeper cost cuts through its alliance with Renault SA, which Daimler AG joined in 2010.

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