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Nissan Motor Co. has trimmed its loss outlook for the fiscal year, a sign the beleaguered automaker is beginning to recover from the worst of the coronavirus pandemic’s impact on its already depressed sales.

Japan’s second-largest carmaker is now forecasting a net loss of ¥530 billion for the fiscal year through March, narrower than previous expectations of ¥615 billion. Nissan posted an operating profit of ¥27.1 billion for the three months through December. Analysts had on average predicted a ¥46.8 billion loss.

Last quarter saw a recovery for the global auto market as a whole, with retail sales hitting the previous year’s levels in the United States and exceeding them in China, Nissan Chief Operating Officer Ashwani Gupta said at a briefing Tuesday. "We are gaining momentum,” he said.

Nissan is about nine months into an aggressive turnaround plan that involves slashing its global production capacity by around a fifth and churning out 12 new models in the 18 months through November to refresh its aging lineup and rouse stagnating consumer interest.

Sales of new models such as the Rogue SUV, which debuted in the U.S. in October, have been charting higher, limiting the drop in Nissan’s overall global sales to less than 10% year-on-year in November and December, compared with a more than 30% decline in the first half of 2020.

For Nissan, "these new models will be key,” said Bloomberg Intelligence analyst Tatsuo Yoshida. "Nissan should pick up a bit because of the new products coming out in markets like the U.S., but right now things are still dire.”

Sales for third quarter ended Dec. 31 fell 11% to ¥2.2 trillion, Nissan said in its earnings statement Tuesday. For the full year, Nissan is now forecasting sales of ¥7.7 trillion. That’s slightly shy of the ¥7.8 trillion analysts were expecting.

The automaker has set a global full-year sales target of around 4 million units, a little down on previous expectations for 4.2 million cars.

In September, Nissan Chief Executive Officer Makoto Uchida said he expects the company to return to profitability in 2021 if momentum keeps up in markets such as China. Nissan is expecting a strong recovery in Asia’s biggest economy and plans to expand its presence there, Uchida said.

Global auto sales are expected to recover steadily this year to 84.4 million units from 76.8 million vehicles in 2020, IHS Markit data shows. Challenges remain, not least the shortage of semiconductors that’s causing automakers worldwide to trim their output.

The automaker has set a global full-year sales target of around 4 million units, a little down on previous expectations for 4.2 million cars, as the company forecasts lingering coronavirus-related disruptions and an inability to produce to demand due to the chip shortage.

Analysts at Mitsubishi UFJ Morgan Stanley Securities estimate the chip crunch will knock 500,000 units off Japanese automakers’ vehicle production.

Though Honda Motor Co., which also reported earnings Tuesday, is projected to bear the brunt of that, Nissan confirmed last month that it is cutting production at one of its plants in Japan, part of a reduction in output that may exceed 10,000 vehicles through March, according to local media reports. Nissan is also suspending some truck production in Mississippi due to the chip shortage, a spokeswoman said last week.

Any share-price correction caused by chip-related output disruptions could range from 10% to as much as 30%, Jefferies analysts Takaki Nakanishi and Lilin Zheng wrote in a report last month. Jefferies rates Nissan stock a hold, arguing the company’s ability to stabilize management and concentrate on structural reforms still needs proving.

Nissan shares, which dropped 12% in 2020, have recovered this year. They were little changed Tuesday.

In September, Chief Executive Officer Makoto Uchida said he expected the company to return to profitability in 2021 if momentum kept up in markets like China, where Nissan also plans to expand, he said.

"We recognize we are still in the negative,” Uchida said Tuesday. "We’re realistic and aware of foreseeable risks, but we’re determined to successfully execute Nissan’s business transformation plan.”

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