Nissan predicts profit above $1 billion this fiscal year, modest Iran war hit
Nissan's Financial Forecast and Impact of Iran War
Profit Projections and War Impact
YOKOHAMA, Japan, May 13 (Reuters) - Nissan forecast more than $1 billion in profit for its fiscal year on Wednesday, predicting a relatively modest hit from the Iran war and an increasing impact from cost-cutting.
The conflict was likely to hurt this year's operating profit forecast of 200 billion yen ($1.27 billion) by less than 15 billion yen, Nissan said, adding that the estimate only covered the first half of the current business year.
Middle East Operations and Sales Reduction
Nissan CEO Ivan Espinosa told reporters that the Japanese carmaker can ship a "good amount" of volume to the Middle East, despite the bottlenecks the war has caused to transport flows.
"We found routes to deliver product," Espinosa said, adding that Nissan expected a sales reduction of around 19,000 vehicles in the first half of its business year due to the conflict.
Comparison with Toyota
The hit is far less than that flagged by Toyota, the world's largest automaker, which said last week the effects of the Iran war would cost it about $4.3 billion this financial year.
Cost-Cutting and Manufacturing Measures
Nissan expects purchasing-related cost-cutting measures and steps in manufacturing to provide a solid boost to this year's profit, while raw material prices are likely to be a drag.
Risks from the Global Economy
The bigger risk Nissan, Toyota and other Japanese automakers face from the conflict comes from the wider impact it could have on the global economy, particularly in the key Asian market, said Julie Boote, an auto analyst at Pelham Smithers Associates.
"There are no Japanese automakers who have included that in their forecast," she said. "They still seem to be quite upbeat about the level of demand from Asia."
Recent Financial Performance
Nissan reported a profit of 58.0 billion yen for the year ended in March, slightly better than an upwardly revised 50-billion-yen profit forecast released late last month.
Factors Affecting Profit
The company booked the profit on improved cost performance and a one-off boost tied to U.S. emissions regulations that offset a hit from Washington's tariffs.
Analyst Expectations
Analysts, according to an LSEG survey, expected Nissan to report a fiscal year loss of 60 billion yen. In the year-earlier period, it posted a profit of 69.8 billion yen.
Challenges and Strategic Response
Like other carmakers, Nissan faces pressure from U.S. tariffs and fierce competition from Chinese electric vehicle makers in Europe and elsewhere.
Impact of U.S. Tariffs
It said U.S. tariffs dragged profit for the past financial year 286 billion yen lower.
Espinosa's Strategy for Growth
Espinosa is trying to return Nissan to steady growth after years of turmoil by cutting jobs, manufacturing sites and the number of cars in its global line-up.
Additional Information
($1 = 157.8200 yen)
(Reporting by Daniel Leussink, Editing by Louise Heavens, Thomas Derpinghaus and Alexander Smith)
