Tokyo - Nissan Motor’s second-quarter profit fell 16 percent as a stronger yen eroded overseas earnings and the Japanese automaker increased incentives in the US.
Net income declined to 146.1 billion yen ($1.4 billion) in the three months through September from 172.8 billion yen a year earlier, the automaker said in a statement on Monday. That compares with the 125.5 billion yen average of seven analysts’ estimates compiled by Bloomberg. The automaker maintained its full-year profit forecast at 525 billion yen.
Nissan’s deliveries in the US climbed even as industrywide sales in the world’s second-largest market shrank, driven by an aggressive dealer-incentive program that weighed on profit. The automaker boosted incentives to about $4 000 per car, much higher than Japanese rivals and almost in the same range offered by the US automakers, according to Tokai Tokyo Research Centre.
The rising yen, which has strengthened more than 18 percent against the dollar in the 12 months through September, is eroding Japanese competitiveness and lowering the value of repatriated earnings.
“It’s not good Nissan has been using incentives to push sales in the US,” Seiji Sugiura, an analyst at Tokai Tokyo, said before the earnings announcement. “The yen is squeezing the Japanese automaker’s profit because it’s a lot higher than last year.”
Shares of Nissan climbed 1.7 percent in Tokyo trading, before it announced earnings. The benchmark Topix Index rose 1.2 percent.
Nissan’s deliveries in the US rose 3.7 percent in the April-September period, compared with a 0.8 percent decline in industrywide sales. The Yokohama, Japan-based carmaker has boosted its market share to 9 percent, compared with 8.5 percent a year earlier, according to researcher Autodata.
Demand for vehicles with smaller engines such as the Sylphy sedan and SUVs including the X-Trail and Qashqai paced Nissan’s deliveries in China. The Japanese automaker’s sales, including light commercial vehicles, increased 8.2 percent in the year through September. That compares with 13.2 percent expansion in industrywide deliveries of both passenger and commercial vehicles. Nissan is targeting to sell 1.3 million vehicles in the world’s biggest auto market this year, including 1.08 million passenger cars.
Nissan’s deliveries in Japan fell 20 percent in the first half of this fiscal year, dragged down by a slump in minicar sales. The popularity of Nissan vehicles was dented by Mitsubishi Motors’ scandal of exaggerating fuel economy for its own models and cars produced for Nissan. Nissan CEO Carlos Ghosn, after completing the purchase of a stake in Mitsubishi Motors, pledged to change Mitsubishi’s culture and seek synergies.
BLOOMBERG