Nissan’s profits wiped out by deep US discounts; shares plunge 7% | World News
Operating profit for April-June totalled 995 million yen ($6.5 million) versus 128.6 billion yen in the same period a year earlier. (Photo: Reuters)
Japan’s Nissan Motor slashed its annual outlook on Thursday after deep discounting in the United States almost completely wiped out the automaker’s first-quarter profit.
The figures confounded the expectations of analysts who saw profit exceeding last year’s, sending Nissan stock plunging 7 .
Investors now have to worry about Nissan’s prospects in the United States, a fresh concern for an automaker already fighting to turn around its fortunes in another critical market, China.
Operating profit for April-June totalled 995 million yen ($6.5 million) versus 128.6 billion yen in the same period a year earlier. The result was just a sliver of the 164.4 billion yen average of five analyst estimates compiled by LSEG.
“The first quarter was a very tough one for Nissan,” Chief Executive Makoto Uchida told an earnings briefing. “However, we’ll recover our performance by taking clear measures to address the challenges and launching new models.” The automaker is “optimising inventory buildup” in the US and will focus on the quality of sales, he said. It plans to bolster sales by offering new and refreshed models such as the Armada and Murano SUVs in the second half of the financial year.
Having endured its worst quarterly performance in over three years, the automaker cut its operating profit forecast for the financial year by 17 to 500 billion yen.
It also cut its retail sales forecast by some 50,000 vehicles to 3.65 million vehicles, citing weaker-than-expected sales in both the US and China.
Big markets
The US and China are Nissan’s two biggest markets, accounting for half of global sales in the year through March and 51 in the first quarter of this financial year.
They are the only two markets where it sold more than 100,000 vehicles in the first quarter. Japan, its home market, is its third-largest market by sales.
While first-quarter sales were even year-on-year at 787,000 vehicles, profit suffered from deep discounts and increased marketing expenses as Nissan tried to ride out competition and move cars off lots, particularly in the United States.
The automaker’s share price tumbled after the earnings announcement, at one point falling some 11 before finishing down 7 at 485 yen, its steepest one-day decline since February.
Nissan said US sales were hurt by an ageing portfolio and a market shift to hybrid vehicles. Its struggles in the world’s biggest economy add to woes in China where it has been looking to regain ground amid a price war with local giants.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
First Published: Jul 25 2024 | 3:00 PM IST
