Nissan keeps annual profit forecasts, cuts unit sales target

Nissan maintained its full-year profit forecasts Thursday, saying it expects chip shortages and other Covid-related disruptions to hit sales volumes, but vowed to fight back through “strict financial discipline”.

The Japanese auto giant said it still expects a net profit of 155 billion yen ($1.2 billion) in the 2022-23 financial year, and also left its operating income outlook unchanged.

It trimmed its annual unit sales target by eight percent to 3.4 million vehicles, however, predicting more production setbacks due to “semiconductor supply shortages, and the impact of the spread of COVID-19 infections in China”.

Net profit in the nine-month period to December tumbled 43 percent on-year to 115 billion yen, Nissan said.

But in the third quarter, net profit jumped 55 percent compared to the same period the previous year.

“Strong currency fluctuations and increases in raw material prices continued to have a significant impact in the third quarter,” with sales volumes driven down by the chip shortage and resurgent Covid-19 infections, Nissan said.

“The third quarter was also a very challenging business environment,” CEO Makoto Uchida added in a statement.

“However, the new models we introduced in each market have been very well received by customers, and we are feeling a strong response for the future.” In the fourth quarter, “Nissan expects to offset the negative impact of volume decline by continued improvement in performance with strict financial discipline,” the company said.

The results come hot on the heels of a landmark deal rebalancing Nissan's fraught alliance with its French partner Renault.

The revamped partnership, signed earlier this week, will end Renault's decades-long dominance over Nissan that has often been dubbed the “unequal treaty”, slashing its share in the Japanese company to 15 percent from 43.4 percent.

The agreement also involved Nissan taking a stake of up to 15 percent in Renault's new electric vehicle venture Ampere.

The rebalancing is the latest twist in Nissan's recent years of tumult, from the arrest of former chief Carlos Ghosn to pandemic-triggered semiconductor shortages and the conflict in Ukraine.

But even after the overhaul of the Nissan-Renault relationships, uncertainty will likely persist over Nissan's path toward recovery, some analysts say.

Underlying this view is “persistent turmoil in supply chains, seen in issues such as the shortage of semiconductors, price hikes of key materials, and expected increases in spending for electrification”, S&P Global Ratings said ahead of the earnings release