Nissan’s heavy exposure to China and recession-hit Europe slammed its earnings with the Japanese auto maker saying Friday its net profit in the three months to December plunged 34.6 per cent.
But the company, part-owned by France’s Renault, added that a weakening yen, cost cutting and a planned slate of new models helped it keep its previous full-year earnings forecast unchanged.
Nissan chief executive officer Carlos Ghosn criticized his company’s quarterly results, saying they fell below expectations as the auto maker also reported that nine-month profit was down about 12 per cent year-on-year.
The firm’s global vehicle sales slipped 3.8 per cent in the quarter to 1.16 million units, hit by slumping demand in Europe and tough conditions in China, the world’s biggest vehicle market.
“Nissan’s performance in the third quarter did not meet our expectations,” Ghosn said in a statement.
“This was primarily the result of difficult operating conditions in Europe for the entire auto industry, in China for Japanese auto makers, and in the U.S. for Nissan.”
Japan’s second-biggest auto maker is the most exposed to the China market among top domestic rivals Toyota and Honda, with its quarterly unit sales in the country down 15.6 per cent.
Nissan’s rivals reported a jump in earnings last week, as the country’s auto makers cemented a recovery from Japan’s 2011 quake-tsunami disaster, although they have also been hurt by a Tokyo-Beijing diplomatic spat.
The long-standing feud flared in September when Tokyo nationalized some of a tiny East China Sea archipelago that is also claimed by Beijing, setting off huge demonstrations across China and a consumer boycott of Japanese brands.
Japanese factories and businesses across China temporarily closed or scaled back operations over fears of being targeted by angry mobs.
Ghosn had previously warned that Nissan would think twice about making new investments in China due to the row. It has several production plants there with a new factory in the northeastern city of Dalian planned for 2014.
A Nissan official said Friday the China market was “normalizing”, echoing similar comments from the firm’s competitors.
Japanese auto makers have also been hit by slumping demand in Europe, with Nissan’s unit sales falling 16.2 per cent on the continent in the quarter.
However, Toyota and Honda have said sales in the key North American market were improving, while Nissan’s fell 6.6 per cent in the quarter.
On Friday, Nissan said it earned ¥54.1-billion ($582-million U.S.) between October and December, down 34.6 per cent from a year earlier, on sales of 2.21 trillion yen, down 5.3 per cent.
Net income in the nine months to December was ¥232.4-billion, from ¥266.1- billion a year earlier.
However, Nissan expects a net profit of ¥320-billion in the fiscal year to March. The forecast is down 20 per cent from an earlier estimate last year.
“We anticipate further yen correction... And we remain confident that we will meet our full-year outlook,” Nissan said, adding that the company has “taken action to reignite our sales momentum and growth”.
Japanese firms have struggled with a strong yen as it made their products less competitive overseas and diluted the value of repatriated foreign income.
The unit hit record highs around 75 against the dollar in late 2011, but it has fallen steeply in recent months. The greenback was trading above the ¥92 level in forex trade Friday.
“The impact of the yen’s depreciation is a decisive factor for the Japanese auto industry and its positive impact will emerge toward the end of this fiscal year,” said Koichi Sugimoto, an auto analyst at BNP Paribas.
“But we are also looking out for negative factors such as the uncertainties in China and stagnant European market.”
Nissan shares slipped 0.60 per cent to end at 987 yen in Tokyo on Friday, before the results were published.