Nissan CEO Carlos Ghosn at the 2013 NY Auto Show.
Nissan kept its balance sheet in the black for the just-ended fiscal year, but despite the lift it got from the weakening yen, the maker had trouble overcoming the ongoing problems it faces in China, as well as some unexpected setbacks in the U.S. market.
The second-largest Japanese maker’s modest 0.3% increase in a net profit of ¥342.45 billion, or $3.4 billion, comes in sharp contrast to the tripling in profits reported earlier this week by arch-rival Toyota Motor Co.
The two automakers were both hurt by problems in China stemming, but Nissan had other issues to deal with, senior officials acknowledged, the company’s CEO Carlos Ghosn telling reporters that “It’s clear that several negative factors outweighed (the) positive contributions” of such things as the weakening yen.
Nissan’s poor performance for the fiscal year that ended March 31 actually was a bit ahead of the ¥330 billion consensus of 21 analysts polled by FactSet.
Ironically, the maker was actually hampered by its own successful turnaround the previous year from a series of disasters that nearly shut down the Japanese auto industry, including a devastating March 2011 earthquake and tsunami. Nissan was able to get its plants back in operation much faster than Toyota and Honda, which means its latest financial report must be compared to record sales and strong earnings while those rivals are being compared to the sharp declines they experienced last year.
(Toyota Profits Surge. Click Here for the full story.)
Nonetheless, that is cold comfort for Nissan which had a variety of issues plaguing it in two of its key markets. China was a particular problem, consumers there moving away from Japanese-made goods in the wake of a dispute between the two countries over ownership of a chain of uninhabited islands.
Toyota officials recently said they don’t expect to work past the problems in China until late this year, and Nissan isn’t expected to do much better. But as the strongest of the Japanese makers operating in China it is especially vulnerable to the slump
Sales slid by 5.3%, to 1.18 million, Nissan’s Chinese market share dropping 0.8 points, to 6.5%. Demand during the final month of the fiscal year dropped another 17% — but in a hopeful sign, sales rose 2.7% in April.
(Honda Profits Up Despite China Problems. Click Here for more.)
But China wasn’t the only setback, CEO Ghosn calling results in North America another “disappointment.” The maker had been “expecting a strong year in the United States,” especially with the launch of an all-new Altima sedan, but “it didn’t happen,” Ghosn conceded.
U.S. sales did increase modestly, thanks to a broad product offensive that also saw new versions of the Pathfinder SUV and Sentra compact sedan, but operating profits for North America tumbled 15.6% last year.
Nissan did pick up a much-needed tailwind as exchange rates began shifting in its favor. It closed the fiscal year at around 94 yen to the dollar, a big shift from the roughly 74 yen average of last autumn. And in recent days, then yen has dipped to around 100, an exchange rate Ghosn has dubbed “neutral territory,” not playing in favor of either Japanese or American manufacturers.
The exchange rate shift – combined with some improving sales in the U.S. appear to have played well for Nissan during the final quarter of the fiscal year, the maker reporting a net profit of ¥110.06 billion between January and March, up from ¥75.34 billion during the same period the year before.