Nissan will reach 2% profit margin goal despite COVID-19 parts pain, CEO says

Nissan Motor Co. is on track to achieve the operating profit margin target it laid out in its turnaround plan despite recent parts shortages that have hammered Japan’s auto industry, Chief Executive Officer Makoto Uchida has said in an interview.

The carmaker will be able to achieve an operating profit margin of 2% or more for the fiscal year ending March, thanks to efforts to cut fixed costs, according to Uchida. “We’re gaining traction,” he said Monday at Nissan’s headquarters in Yokohama.

Achieving the target set out last year in the “Nissan Next” midterm plan would be a positive sign that the carmaker is holding up despite the shortages plaguing the auto industry.

Toyota Motor Corp. adjusted its September and October output because the spread of COVID-19 in Southeast Asia has disrupted its access to semiconductors and other key parts. Honda Motor Co. said its production lines in Japan are operating at about 40% of its initial plan for the August to September period.

Nissan’s July forecast for revenue of ¥9.75 trillion ($87.7 billion) suggests an operating margin outlook of about 1.5% for the current fiscal year. Analysts, on average, are forecasting 1.8%. Given that Nissan’s midterm plan also includes operating profits from its China business, there’s a possibility that it may reflect a higher margin when complete figures are released.

Nissan is more than a year into a turnaround plan that involves cutting fixed costs and work related to a dozen new vehicles it’s planning to bring to market. Citing strong vehicle sales, the automaker is forecasting a return to annual profit for the first time in three years.

Like other automakers, Nissan is also being “greatly impacted” by the parts shortages and conditions remain unclear, Uchida said. “Amid all that, the momentum of what we’ve done with Nissan Next is steadily bringing results,” he said.