Nissan CEO Carlos Ghosn, shown with a Nissan Leaf, forecasts an unexpectedly good year..
Like its major Japanese rivals, Toyota and Honda, the March 11 earthquake and tsunami will take a substantial toll on Nissan’s earnings for the current fiscal year, the maker forecast today – but Nissan officials also predicted that their company will experience another year of record sales despite a substantial cut in production in the weeks following that disaster.
Nissan’s strong reliance on overseas assembly plants – and suppliers outside Japan – helped minimize the impact of the disaster, the company has suggested, allowing it to resume production faster than those competitors, especially Toyota, which continues to base a large portion of its production operations in the home Japanese market.
Nissan’s net profit is now projected to slip 15.4%, to ¥270 billion, or $3.4 billion, down from ¥319 billion in the previous fiscal year, which ended March 31. On the other hand, revenues are expected to climb 7.1%, to ¥9.4 trillion. The maker, meanwhile, said it would double its dividend to ¥20 per share this year.
The gap between revenues and profits reflects not only the steep cost of working through the aftermath of the March disaster, but also the impact of a strong yen. But with significant local production in key markets like the U.S., analysts say Nissan is less impacted by lopsided exchange rates than Toyota.
Prior to the release of the delayed financial forecast, Nissan President and CEO Carlos Ghosn had indicated the maker’s production operations are largely back to normal, well ahead of both Toyota and Honda – though both of those makers now say they expect to be up to full capacity earlier than originally feared.
With the disaster fading into memory, Nissan now is betting it can boost production for the fiscal year by 11.2%, to 4.613 million vehicles. That would handily exceed the previous record 4.185 million vehicles the maker rolled out last year. Sales, meanwhile, are projected to jump 9.9%, to 4.6 million.
“Continuous growth in 2011 will bring Nissan a new record volume,” said Ghosn, in a prepared statement, crediting, “The unrelenting work ethic of Nissan employees” for helping the company work through “one of the worst natural disasters in modern history.”
While Nissan sales would still fall well short of Toyota’s target, it would actually beat the larger maker’s earnings forecast. Toyota this month projected a roughly one-third dip in profits, to ¥300 billion, while Honda expects to report earnings of ¥195 billion, a decline of nearly two-thirds from the prior fiscal year.
Nissan is counting on overseas growth to fuel its ambitious plans, especially the U.S., where sales are forecast to increase 7.7%, and China, with a projected 12.3% increase, to 1.15 million, which would cement the fast-growing nation’s status as Nissan’s top market.