Nissan CEO Carlos Ghosn announcing earnings.
Its sales outpacing the rest of the global industry, Nissan Motor Co. earnings increased 5% for the January to March quarter – though favorable exchange rates also helped drive up earnings.
Nissan’s numbers came out ahead of the predictions by a group of analysts surveyed by FactSet. The automaker also signaled that it expects further growth during the fiscal year that began on April 1, countering arch-rival Toyota which issued a more cautious forecast for the coming year.
For the most recent three-month period, sales jumped 20%, to 3.2 trillion yen, or $31 billion, but the quarterly profit of 114.9 billion yen, or $1.1 billion, but a more modest 5%, from 109.7 billion yen, something described only as “satisfactory” by Nissan CEO Carlos Ghosn, who said the company must work harder in “pursuing profitable growth opportunities, focusing relentlessly on quality and enhancing our sales power.”
For the full fiscal year, Yokohama-based Nissan delivered net earnings of 388 billion yen, or $3.9 billion. It was a rise of 4%, which Ghosn described as “solid,” predicting that the maker will see another 4% increase – to 405 billion yen, or $4 billion, in the new fiscal year.
“Nissan’s performance will improve further in 2014,” the CEO promised. “We are taking determined steps to reach our Power 88 goals including greater focus on market-by-market execution, ramping up newly installed manufacturing capacity and strengthening our brand power.”
Key targets of the Power 88 plan are to reach a global 8% market share and to boost profit margins to 8%.
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But not everyone is upbeat about the prospects of continued gains by the Japanese makers – including the industry’s largest manufacturer, Toyota. That maker last week reported net profits of 1.82 trillion yen, or $17.9 billion at current exchange rates. That was nearly double the 962 billion yen it earned the year before. But Toyota is anticipating a slowdown in the 2014 fiscal year, with earnings forecast to dip slightly to 1.78 trillion yen, or $17.5 billion.
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A key concern is the current exchange rate. Japanese automakers have benefited significantly from a weakening yen, which dipped to around 100 to the dollar during the 2013 fiscal year, from 80 a year before. That momentum is not expected to continue.
But Nissan is expected to work on improving its profit margins in pursuit of its Power 88 goals. It is also counting on new products, such as the newly updated Versa, as well as its critical Altima sedan, which has been gaining on the traditional leader, the Toyota Camry, in the critical U.S. market.
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Meanwhile, Nissan is rebuilding momentum in the world’s largest automotive market, China, where all Japanese makers have been struggling for several years due to a political dispute between the two nations over the ownership of a small chain of uninhabited islands.
Nissan’s sales growth in China outpaced the overall gains in the booming market, at 17%, to 1.27 million vehicles. That nearly matched the 1.29 million vehicles the maker sold in the U.S. during the last fiscal year. Nissan’s American sales were up 13%, also outpacing the market’s recovery.