Nissan Motor reiterated its annual earnings forecasts as it reported its first quarterly net profit in two years, a feat marred slightly by reduced vehicle sales expectations due to weaker demand in China and continued uncertainty over operations in the Middle East.
The Japanese carmaker on Monday said sales grew in the U.S. and Japanese markets for the three months ended June, while cost cuts and foreign-exchange gains helped boost its bottom line.
For the fiscal year ending March 2027, it continues to expect sales growth in North America, Japan and Europe, but now projects an 11% sales drop in China, a reversal from the 8.7% increase forecast earlier.
Chief Executive Ivan Espinosa attributed weaker Chinese sales to slowed economic growth and an accelerated shift to electrified vehicles due to higher fuel costs caused by the Iran war.
Espinosa said the company will manage inventory in line with market demand and rebalance its sales mix to grow new-energy vehicles, a term encompassing electric vehicles and plug-in hybrids. "China remains a significant challenge for Nissan and the broader industry," he said.
The Middle East is another challenge. While customer demand for Nissan vehicles remained resilient, elevated logistics costs and continuing geopolitical uncertainty will likely moderate profitability until supply chains normalize, Espinosa said.
Chief Financial Officer George Leondis estimated that the impact from the Middle East conflict would drag vehicle sales by about 18,000 units in the first half and weigh on profit by 20 billion yen, equivalent to $127.1 million. Nissan previously projected a drag of 19,000 units and Y15 billion.
The surprise swing to profit was encouraging, however. It comes as the Japanese carmaker has taken a series of restructuring steps to cut costs and address falling sales, including selling its headquarters and reducing manufacturing sites and global production capacity. Nissan has also said it will cut 20,000 jobs over the four years through March 2028.
In June, Nissan said it was in talks to manufacture cars for China's Chery Automobile at its Sunderland facility in the U.K., a month after the company announced plans to slash hundreds of jobs in Europe and overhaul its operations in the region.
Beyond the restructuring, Nissan is taking steps to improve its offerings. It started selling the Infiniti QX65 midsize luxury sport-utility vehicle in the U.S. recently and plans to bring the Rogue Hybrid e-Power to the American market later this year.
It has also teamed up with Uber Technologies and U.K. self-driving car startup Wayve to offer robotaxi services. A pilot program in Tokyo is planned for late 2026.
The Japanese carmaker on Monday reported net profit of Y3.76 billion for the three months ended June, compared with net loss of Y115.76 billion in the year-ago period. That was better than the Y3.65 billion loss estimated in a poll of analysts by data provider Quick. Revenue grew 9.5% to Y2.964 trillion.
For the year ending next March, the carmaker now expects global sales to be largely flat at 3.15 million units, down from 3.30 million forecast previously. The company kept its outlook for net profit of Y20.00 billion and revenue to grow 8.3% to Y13.000 trillion.
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