Nissan profit forecast falls short as US incentives rise, Japan lifts taxes

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Tokyo - Nissan Motor, Japan’s second-biggest car maker, forecast profit yesterday that missed analysts’ estimates, as intensifying competition drives up incentive spending in the US.

Net income would climb 4 percent to ¥405 billion (R41bn) in the year to March next year, the highest since the 2008 fiscal year, the company said. That is about 5 percent below the average of 20 analyst estimates.

Nissan joins Toyota Motor and Honda Motor in predicting smaller profits than analysts estimated, as the benefits from a weaker yen fade and Japanese car makers brace for a record decline in domestic demand because of Japan’s first sales tax increase in 17 years.

Chief executive Carlos Ghosn also faces incentive spending levels that are higher than the average of Asian car brands in the US.

“Everybody seems to be conservative in their forecasts,” said Koji Endo, a Tokyo-based analyst at Advanced Research Japan. “The yen is stabilising, the competition in the US is getting fierce, and the domestic market will decline this year.”

Nissan forecast global deliveries would climb 8.9 percent to 5.65 million vehicles this financial year, representing a global market share of 6.7 percent. It said revenue would rise 3 percent to ¥10.79 trillion, while operating profit would gain 7 percent to ¥535bn.

For the financial year that just ended, Nissan’s net income rose 14 percent to ¥389bn, beating its reduced forecast and analysts’ estimates on better-than-expected fourth-quarter results. In the quarter to March net income reached ¥114.9bn, against analysts’ estimates of ¥99.9bn. Operating income climbed to ¥197.7bn, while sales reached ¥3.2 trillion.

The car maker has set the goal of achieving an 8 percent operating margin by March 2017 and an 8 percent global market share.

“When you see your main competitors are not announcing great results for 2014, you have to be cautious because they expect the market to be very competitive,” Ghosn said at a briefing yesterday. “You have to be careful of what measures they are going to use on the market in order to deliver on their results.”

Nissan’s share price fell 0.2 percent to ¥869 at the close of trading in Tokyo yesterday, before the earnings announcement. The stock has declined 1.7 percent this year, compared with an 11 percent drop in the benchmark Topix index. – Bloomberg/Sapa-AFP

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