YOKOHAMA (Feb 8): Nissan Motor Co Ltd on Thursday cut its forecast for full-year operating profit as it expects that costs related to improper final vehicle inspections at home and inventory adjustments will drag on its bottom line.
Japan's No. 2 automaker expects operating profit in the year ending March to slide to 565.0 billion yen (US$5.15 billion) from 742.23 billion yen last year. This is down from a previous forecast for 685.0 billion yen, and would mark Nissan's lowest profit since 2014.
For the third quarter, the automaker reported a halving in operating profit to 82.4 billion yen, much lower than a mean estimate of 154.03 billion yen from nine analysts polled by Thomson Reuters I/B/E/S.
In October-December, Nissan said that it took a 39.6 billion yen hit due to costs related to improper procedures for final inspections on vehicles produced at its domestic plants, while US marketing and sales expenses, which include incentives, cost the automaker 41.8 billion yen.
Nissan admitted the inspection issue late last year, which resulted in the recall of around 1.2 million vehicles, including all passenger cars it produced for sale at home over the past three years.
In October-December, it sold 1.375 million vehicles globally, slightly lower from 1.38 million units a year earlier. Sales in the United States, its biggest market, rose 4.1% from last year to 397,000 units, while sales in China rose 15.7% to 369,000 units.
It expects to sell 5.78 million vehicles in the year to March, down from a previous forecast for 5.83 million units, due to lower sales in Japan and Europe, although it expects stronger sales in Asia, including China.
Operating profit in North America fell 37.3% to 16.9 billion yen, dropping due to high incentives to sell older models.
A change in US income tax policy resulted in a positive impact of 207.69 billion yen on net profit in the year through December, which jumped 39.6% to 578.1 billion yen the company said.
(US$1 = 109.6300 yen)