Nissan quarterly profit slides 20.3% after quake

Japanese automaker Nissan on Wednesday said net profit in April-June fell by a better-than-expected 20.3 percent on-year due to the impact of the March disaster on production and a strong yen. The fiscal first quarter saw heavy disruption after the earthquake and tsunami triggered parts and power supply shortages. Nissan posted a net profit of 85 billion yen ($1.04 billion according to Nissan's average rate) in the period, easily beating market expectations ranging from 40 to 60 billion yen. The maker of the all-electric Leaf booked a 21.1 billion yen extraordinary loss in the fiscal first quarter due to the disasters, but added that it did not expect any big quake-related losses for the rest of the fiscal year. The 9.0-magnitude earthquake and tsunami on March 11 destroyed entire towns, left more than 20,000 dead or missing and crippled power-generating facilities, including a nuclear power plant at the centre of an ongoing crisis. Japanese firms were hit hard by power and chronic parts supply shortages, with the likes of Nissan, Toyota and Honda having to sharply cut production and shut plants due to a lack of crucial components. However Nissan's recovery has outpaced its peers with global production in June growing 18.5 percent year-on-year to 419,831 units. Toyota and Honda declined by 7.9 percent and 44.5 percent respectively. Ratings agency Moody's on Tuesday upgraded Nissan by one notch to Baa1, citing the automaker's profitability and its global market position amid easing concerns over the impact of the March tragedy. "Our rapid recovery from the natural disasters in March once again shows the power of Nissan in responding effectively and decisively to crisis," said Nissan President and CEO, Carlos Ghosn in a statement, "despite strong headwinds such as foreign exchange and rising raw material costs". While Japanese firms have been seen to recover more quickly than expected, many continue to face challenges as the yen nears its postwar high against the dollar. A strong domestic unit erodes the overseas earnings of exporters. Nissan posted an operating income of 150.4 billion yen in the three months ended June 30, down 10.4 percent year-on-year as the strong yen weighed on profitability. It retained an earlier forecast for an annual net profit of 270 billion yen. Globally, Nissan sold a total of 1,056,000 vehicles in the first quarter of fiscal 2011, up 10.6 percent on-year. Japan's second-biggest auto maker by volume, after Toyota, had a 5.8 percent global market share last year. The auto giant last month unveiled a six-year business plan in which it aimed to achieve a global share of eight percent by the end of fiscal 2016. Nissan, which is 44.3 percent owned by French partner Renault, also said it aimed to lift its operating profit margin to eight percent in that period under its "Nissan Power 88" growth plan. It said it would also aim for a 10 percent share of the Chinese market, the world's biggest, while boosting its presence in economies such as India and Brazil. Nissan currently has a 6.2 percent market share in China. On Tuesday, Nissan said it and its Chinese partner Dongfeng Motor Co. will invest 50 billion yuan ($8 billion) and launch around 30 models in China over the next five years. Nissan shares closed down 1.85 percent in Tokyo Wednesday ahead of the announcement.