Nissan profit tumbles on China, Europe woes

Nissan's heavy exposure to China and recession-hit Europe took a bite out its earnings with the Japanese automaker saying Friday its net profit in the three months to December plunged 34.6 percent. But a weakening yen, cost cutting and a planned slate of new models helped the company, part-owned by France's Renault, keep its full-year forecast unchanged. Nissan Chief Executive Carlos Ghosn criticised his company's quarterly results, saying they fell below expectations as the automaker also reported that nine-month profit was down about 12 percent year on year. The firm's global vehicle sales slipped 3.8 percent 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 automakers, and in the US for Nissan." Japan's second-biggest automaker is the most exposed to the China market among its top domestic rivals Toyota and Honda, with its quarterly unit sales in China down 15.6 percent. Nissan's rivals reported improved earnings last week, although they have also been hurt by a Tokyo-Beijing diplomatic spat. The long-standing row flared in September when Tokyo nationalised 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 the country because of the row. It has several production plants in China with a new factory in the northeastern city of Dalian planned for 2014. A Nissan official told a news briefing Friday that, despite the poor sales in China, the market was "normalising by the end of January". Japanese automakers have also been hit by slumping demand in Europe, with Nissan's unit sales falling 16.2 percent on the continent in the quarter. However, Toyota and Honda earlier reported that their sales in the key North American market were improving, while Nissan's fell 6.6 percent in the quarter . On Friday, Nissan said it earned 54.1 billion yen ($582 million) in the quarter, down 34.6 percent from a year earlier, on sales of 2.21 trillion yen, down 5.3 percent. Net income in the nine months to December was 232.4 billion yen, down from 266.1 billion yen a year earlier, the company said. However, it still expects to book a net profit of 320 billion yen in the year to March. "We anticipate further yen correction... And we remain confident that we will meet our full-year outlook," Nissan said. Ghosn added that the automaker has "taken action to reignite our sales momentum and growth". Japanese firms struggled with a strong yen last year 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 buying around 92.66 yen on Friday in Asia. "The impact of the yen's depreciation is a decisive factor for the Japanese auto industry and its current 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 percent to end at 987 yen in Tokyo on Friday, before the results were published.